The Delaware Supreme Court certified an allocation question to the New York Court of Appeals that could have a major impact on policyholders’ recoveries for multi-year claims.
Judge Thomas C. Wheeler of the U.S. Federal Court of Claims has issued a decision in one of the most watched cases directly tied with the government response to the 2008 financial crisis.
Five of the federal banking regulatory agencies (Federal Deposit Insurance Corporation, Federal Reserve Board, Office of the Comptroller of the Currency, Farm Credit Administration, and National Credit Union Administration) recently issued a joint final rule regarding flood insurance.
The first half of 2015 was an active period for new securities class action lawsuit filings. The filings through the year’s first six months suggest we are on pace for the highest annual number of new filings since 2011.
Financial Institution Bond Bars Coverage for Loss Not Resulting Solely from Duties of Outside Investment Advisor
The New York Supreme Court Appellate Division has held that a financial institution bond barred coverage for loss that did not result solely from the dishonest acts of an outside investment advisor. Jacobson Family Inv., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 2015 WL 3767850 (N.Y. App. Div. June 18, 2015).
The insured asset manager sought coverage under a financial institution bond for losses sustained as a result of the dishonest acts of Bernard L. Madoff. The insured contended that the losses were covered under Rider 14 of the bond, which provided coverage for “loss resulting directly from the dishonest acts of any Outside Investment Advisor, named in the Schedule below, solely for their duties as an Outside Investment Advisor.” Madoff was listed as an outside investment advisor, and the insured asset manager disclosed that Madoff managed over $120 million in assets for it.
The court held that the losses resulting from Madoff’s dishonest acts were not covered for two reasons. First, the court held that Madoff’s acts did not trigger coverage under Rider 14 because Madoff was not acting solely in his capacity as an outside investment advisor. When committing the dishonest acts, Madoff was acting as a securities broker and an outside investment advisor to the insured as evidenced by the insured’s claim for compensation under the Securities Investor Protection Act for Madoff’s theft of assets as a securities broker. Because the insured could not separate whether Madoff’s activities as an outside investment advisor or his activities as a securities broker resulted in the insured’s losses, it could not meet its burden to prove that the losses were covered under Rider 14. Second, the court held that an exclusion barred coverage for the losses. The exclusion precluded coverage for “loss resulting directly or indirectly from any dishonest or fraudulent act or acts committed by any non-Employee who is a securities . . . broker.” The court held that Madoff was a non-employee and that he was a registered broker-dealer at all relevant times.
No, ice damming isn’t the practice of cursing at ice during the winter months (although may residents of the Northeast may beg to differ).
In McGinnes Industrial Maintenance Corp., v. The Phoenix Ins. Co., the Texas Supreme Court answered a certified question from the Fifth Circuit on whether a U.S. Environmental Protection Agency proceeding against an alleged polluter constitutes a suit under an insurance policy, warranting defense coverage.
In a recent post in which I discussed the “basic value proposition” of D&O insurance, I noted that among the five indispensable elements required in order for coverage under a D&O insurance policy to exist is the requirement that of a Claim for an alleged Wrongful Act against an Insured Person acting in an Insured Capacity.
Our client, a custom photography firm specializing in high quality commercial photography, purchased insurance for its Hoverfly Scripta drone.
So how was everyone’s Pride weekend? Likely, many spent it celebrating the Supreme Court victory—but that’s only the beginning.