Bond insurer served Wells notice

The U.S. Securities Exchange Commission recently served MBIA Inc. with a “Wells” notice in lieu of the retroactive reinsurance the bond insurer had purchased to cover its losses.
As a result of its actions to cover losses resulting from its guarantee of bonds issued by Allegheny Health, Education and Research Foundation, MBIA may face a civil injunctive action.
The SEC alleges that MBIA violated federal securities laws relating to excess-of-loss and quota-share agreements the insurer and three others entered in order to retroactively reinsure losses from guaranteeing bond issues by the nonprofit organization which became bankrupt while retaining outstanding bond issues.
Parties involved are discussing resolution of charges.