Tag Archives: SEC

Guaranteed Rate v. Ace American Insurance – a victory for policyholders seeking coverage for government investigations

Government investigations by SEC, DOJ, and state attorney generals are a significant source of exposure for companies and their directors and officers. Companies can spend millions of dollars responding to a government subpoena or investigative demand. The broadly worded demands for information or testimony typically require extensive searches through mountains of paper documents and electronically … Continue Reading

Labels, Shmabels: Recent Decisions Confirm No “Restitution / Disgorgement” Exclusion in Management Liability Policies

By Kathryn Bayes and Courtney Horrigan on 16 December 2021 Posted in D&O, E&O, Professional Liability, Financial Insurance Coverage, Insurance Coverage

Ever since the Seventh Circuit’s 2001 decision in Level 3 Communications, Inc. v. Federal Insurance Co., 272 F.3d 908 (7th Cir. 2001), insurance companies have argued that settlements constituting restitution or disgorgement are uninsurable on grounds of public policy. While numerous decisions since 2001 have undercut this defense, two recent decisions out of the New … Continue Reading

End to long-running dispute over uninsurability under D&O insurance

By Christopher Kuleba and Matthew B. Weaver on 6 December 2021 Posted in D&O, E&O, Professional Liability, Financial Insurance Coverage, Insurance Coverage

Putting an end to a 12-year-old dispute between J.P. Morgan Securities’ predecessor, Bear Stearns & Co., and several of its insurers, on November 23, 2021, New York’s high court held that J.P. Morgan’s $140 million payment to the Securities and Exchange Commission (SEC) did not constitute an uninsurable “penalty” under J.P. Morgan’s excess directors & … Continue Reading

Lessons Learned: Report All Potential D&O Liability Insurance Claims Without Delay

By Courtney Horrigan on 8 January 2015 Posted in D&O, E&O, Professional Liability

The District Court of Massachusetts' January 6, 2015 opinion in Biochemics, Inc. v. Axis Reinsurance Co., 2015 WL 71493 (D. Mass. Jan. 6, 2015), reaffirms the importance of providing timely notice of all D&O liability claims - including subpoenas. In Biochemics, the policyholder sought coverage from its primary D&O liability insurer, Axis, for defense costs it incurred in an SEC enforcement action commenced during the AXIS policy period. Judge Rya Zobel held that Biochemics had no coverage for the SEC enforcement action because it related back to two deposition subpoenas that the SEC served on Biochemics before the AXIS policy incepted. Because those deposition subpoenas indicated on their face that the SEC had commenced a formal investigation against Biochemics, each subpoena was a "Claim" that should have been reported to Biochemics' prior D&O carrier. Because the Claim was "first made" before the AXIS policy period, Judge Zobel granted AXIS' motion for summary judgment and found that AXIS owed Biochemics no coverage under its policy.… Continue Reading