Another pact OK’d
for Investors Equity

By Russ Lynch
Star-Bulletin

The investment firm of Goldman Sachs & Co. will pay $15.9 million to settle claims brought by the state on behalf of policy holders in the defunct Investors Equity Life Insurance Co.

Rey Graulty, state insurance commissioner, said that brings to $38 million the amount recovered so far from lawsuits and other actions against brokerage firms that handled Investors Equity money.

The case against Goldman Sachs was to have been heard in the state Circuit Court in January, but the trial now has been averted, Graulty said.

Investors Equity was shut down by the state in 1994, when it was found to have a deficit of more than $60 million. Its 13,000 life policies in Hawaii have since been transferred to ITT Hartford.

As liquidator, Graulty has been working to recover money for holders of annuity policies. Major targets have been national brokerages that invested the policyholders' funds in risky derivatives and futures. Graul-ty said yesterday that during the first five months of 1994 alone, Investors Equity assets were used to trade more than $86 billion worth of treasury bond futures, resulting in losses well above the company's 1993 net worth of $16 million.

One case remains unresolved, the state's action against Archer-Daniels-Midland Investors Services Inc., which is in the hands of the 9th Circuit Court of Appeals. The Investors Equity claims against others -- Merrill Lynch & Co., Dean Witter Reynolds, Nomura Securities International, and Tradition North America Inc. -- have been settled.