Archive for the ‘Directors & Officers’ Category

CFPB Issues New Arbitration Rule – Are the Flood Gates Opening for Consumer Class Actions against Financial Institutions?

Friday, July 14th, 2017

By: Matthew Ferguson and Michael Sabino

On July 10, 2017, the Consumer Financial Protection Bureau (CFPB) issued a rule (full text here), which prohibits many financial institutions from including mandatory arbitration provisions that limit their customers’ ability to join class action litigation. The rule, which may become effective as early as 2018 and only applies to new accounts opened after the effective date, appears to apply to a broad range of financial institutions, including banks, credit card and consumer financing companies, debt management and collections operations, auto leasing companies, and other entities that provide fund transfers and money exchanges (i.e., check cashing services). However, there may be opposition in Congress, as well as by the current administration, to the rule’s ultimate implementation.

The rule further requires impacted financial institutions using arbitration clauses in consumer disputes to submit records relating to arbitration and court proceedings to the CFPB. The CFPB intends to review the collected information to monitor the proceedings to determine whether additional consumer protections are warranted, or if further CFPB action is required.

The enactment of the rule stemmed from the Dodd-Frank Act and instructions from Congress in 2010, which led the CFPB to conduct a study of pre-dispute arbitration agreements between consumers and financial institutions. The study found that in addition to many consumers opting to forgo a formal dispute process with financial service providers, many contracts for consumer financial products and services included mandatory arbitration clauses, which blocked the customers’ ability to join related class action proceedings. The CFPB concluded that class actions provide a more effective means for consumers to challenge potentially problematic and abusive practices by financial service providers than arbitration clauses. Additionally, the agency determined that the arbitration clauses effectively blocked similarly situated consumers from collectively pursuing common disputes in court. The CFPB also found that the use of the arbitration clauses insulated financial institutions from significant consumer-related awards and judgments, which failed to discourage harmful practices from continuing.

If the rule becomes effective, it is likely to impact a wide-array of both small and large financial institutions. By forcibly removing the ability of the financial institutions to arbitrate customer claims, it is foreseeable that the frequency and severity of consumer-oriented class actions faced by these financial institutions will sharply increase. Such an increase in consumer-oriented litigation against effected financial institutions may have a significant impact on those entities’ respective FI, E&O and D&O insurers, who may see an influx of larger claims stemming from class action litigation, instead of smaller and less costly individual arbitrations.

No Coverage for Multi-Million Dollar False Claims Act Settlement Due to Insured’s Failure to Provide Sufficient Details in Notice to Insurers

Thursday, July 13th, 2017

By: Kimberly Forrester

On June 23, 2017, Judge Lipman ruled in First Horizon National Corp., et al. v. Houston Casualty Co., United States District Court for the Western District of Tennessee Case No. 2:15-cv-2235 that First Tennessee Bank’s (Bank) primary insurer, Houston Casualty Company, and seven excess insurers did not have to pay their combined $75 million limits for the Bank’s $212.5 million settlement of claims alleging the Bank violated the False Claims Act. Specifically, the Western District of Tennessee Court (Court) held that the Bank had not provided sufficient notice to the insurers of the circumstances leading up to the deal. In affirming the primary and excess insurers’ denial of coverage for the Bank’s settlement, the Court reasoned that although the claim first arose during the relevant policy period, the Bank failed to provide sufficient details and adequate notice of the claim as required under the primary policy’s notice of circumstances (NOC) provision.

The Bank’s coverage was in effect from August 2013 through July 2014. Although the underlying Department of Justice (DOJ) investigation began in 2012, the DOJ did not share with the Bank its view that the Bank was in violation of the False Claims Act until a May 2013 meeting. Then, in April 2014, the DOJ offered to settle its claims against the Bank for a $610 million payment. The following month, in May 2014, the Bank sent a NOC to its insurers, stating:

“Since second quarter 2012 FHN has been cooperating with the U.S. Department of Justice (DOJ) and the Office of the Inspector General for the Department of Housing and Urban Development (HUD) in a civil investigation regarding compliance with requirements relating to certain Federal Housing Administration (FHA)-insured loans. During second quarter 2013, DOJ and HUD provided FHN with preliminary findings of the investigation, which focused on a small sample of loans and remained incomplete. FHN prepared its own analysis of the sample and has provided certain information to DOJ and HUD. Discussions between the parties are continuing as to various matters, including certain factual information. The investigation could lead to a demand or claim under the federal False Claims Act and the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which allow treble and other special damages substantially in excess of actual losses. Currently FHN is not able to predict the eventual outcome of this matter. FHN has established no liability for this matter and is not able to estimate a range of reasonably possible loss due to significant uncertainties regarding: the potential remedies, including any amount of enhanced damages that might be available or awarded…”

Significantly absent from the Bank’s notice to the insurers was any reference to the DOJ’s $610 million settlement demand.  The following year, in June 2015, the Bank agreed to settle the DOJ’s claims for $212.5 million. The insurers denied coverage for the Bank’s settlement on the grounds that the Bank had not provided timely or adequate notice as required under the primary policy. The Bank then sued its insurers in an effort to obtain the collective $75 million limits from the policies.

Agreeing with the insurers, the Court concluded that the April 2014 settlement offer was a Claim for which the Bank failed to give appropriate notice under the primary policy. The Court reasoned that by not mentioning the DOJ’s $610 million settlement demand, the Bank’s notice did not include sufficient information to alert the insurers of the significance of the claim and failed to comply with the primary policy’s NOC provision requiring “full particulars as to dates, persons and entities involved, potential claimants, and the consequences which have resulted or may result therefrom.” In reaching the holding, Judge Lipman stated “[t]he general, boiler-plate type language contained in the NOC was not sufficient notice of this Claim…To permit Plaintiffs to rely on the NOC submitted in May 2014 as notice of the April 2014 Claim defeats the purpose behind a claims-made policy, wherein the purpose of the notice requirement is to inform the insurer of its exposure to coverage.” The Court further opined that the Bank’s statements in the NOC were “not reflective of the state of affairs at the time” and dismissed all of the Bank’s bad faith claims against the insurers, finding that there was a reasonable dispute among the parties about the timing and coverage for the underlying claim.

This case serves as an important reminder that insureds must provide specific details about claims and potential claims as soon as they become aware of them and not to omit vital information relative to exposure. It also highlights some of the coverage issues that can arise from False Claims Act Litigation. Sedgwick attorneys Kimberly Forrester (SF) and Matthew Ferguson (NY) previously addressed some of these coverage issues, including claims made and reported defenses, that can arise with False Claims Act litigation in their article titled “False Claims Act Litigation and Implications for D&O and Professional Liability Insurers”, which can be found here. As the exposure and frequency of these claims continue to rise for these suits, there is likely to be further court analysis of coverage implications under various provisions of corporate policies.

New Jersey Supreme Court Affirms Viability of Late Notice Defense Under Claims-Made Policies

Friday, February 12th, 2016

By William Brennan, Sedgwick New York

In a decision released yesterday, the New Jersey Supreme Court held that an insurer could deny coverage under a claims-made directors and officers policy based on the insured’s late notice, without any evidence of prejudice to the insurer.

In Templo Fuente De Vida Corp., et al. v. National Union Fire Insurance Co., ___ A.3d ___, 2016 WL 529602 (N.J. Feb. 11, 2016), the underlying plaintiffs brought a number of claims against First Independent Financial Group. (“First Independent”) in the wake of a failed real estate deal for which First Independent had promised to provide funding, only to come up empty when the closing date rolled around.  First Financial’s D&O policy with National Union required it to provide notice of claims “as soon as practicable” and within the policy period.  Yet First Financial did not notify National Union of this claim until six months after it had been served, and after it had retained counsel and filed an answer.  National Union promptly disclaimed on grounds of late notice.  In the ensuing coverage litigation brought by the underlying plaintiffs, to whom First Financial assigned its insurance claim, the trial court granted National Union summary judgment on the basis of the late notice defense, brushing aside the plaintiffs’ arguments that National Union should be required to demonstrate prejudice arising from the late notice.  After an affirmance by the New Jersey Appellate Division, the issue arrived at the Supreme Court.

The New Jersey Supreme Court acknowledged that New Jersey does require insurers to show prejudice in order to make out a late notice defense, but noted that this principle applied only to occurrence policies.  The Court emphasized that it approached occurrence and claims-made policies differently due to its belief that the “vast majority” of policyholders with occurrence policies were unsophisticated consumers buying adhesion contracts, while claims-made policyholders, especially for D&O policyholders like First Independent, were sophisticated insureds advised by sophisticated brokers.  Given this background, the Court found that the National Union policy at issue, including its notice requirement, “sufficiently conformed to the objectively reasonable expectations of the insured, and, hence, did not violate the public policy of New Jersey.”  It therefore enforced the prompt notice requirement as written, without imposing a further “prejudice” requirement.

Sedgwick Supports ACCEC Insurance Law Symposium

Friday, January 8th, 2016

The American College of Coverage and Extracontractual Counsel (ACCEC) is hosting an Insurance Law Symposium on January 22, 2016, at Boston College Law School, in Newton, Massachusetts. Our partner Bruce Celebrezze is Secretary-Treasurer of the ACCEC.

The symposium is designed to enhance and further the dialogue on the issues facing today’s insurance industry by bringing together insurance professionals and regulatory authorities to share insights.  Topics range from intellectual property disputes and D&O liability to cybersecurity and data breach claims. The Hon. Herbert Wilkins (ALI Council member and former Chief Justice, Supreme Judicial Court of Massachusetts) will speak on A Chief Justice’s Perspective on Restatements and the Law.

Established in 2012, the ACCEC brings together pre-eminent lawyers representing the interests of both insurers and policyholders to improve the quality of the practice of insurance law and to increase civility and professionalism in its field. Its mission includes educating all sectors involved in insurance disputes — including the judiciary, legal and insurance professionals, and businesses — on critical topics such as best practices in policy formation and claims handling, developing trends in insurance law, and bad faith. Through its Board of Regents and its working committees, the College engages in a wide variety of activities designed to promote those goals, in addition to improving the civility and the quality of the practice of insurance law.

The registration deadline is Friday, January 15. Space is limited and available on a first-come, first-served basis. For more details, click here.

New Frontiers for Financial Institution and Directors & Officers Insurance

Tuesday, September 1st, 2015

By Andrew Milne, Sedgwick London

Recent years have shown that regulators in developing countries are becoming more active in investigating corporate misfeasance and improper conduct of directors.

In India, action has been taken in recent months by the Securities and Exchange Board of India, the Serious Frauds Investigation Office, and the Central Bank of India against former executives and the founder of Satyam Computer Services for false accounting and pocketing wrongful gains from share transactions.  Regulators have imposed bans on the individuals’ involvement in capital markets, issued orders requiring them to repay millions of dollars to Satyam, and brought criminal proceedings against them.

In Brazil, a massive corruption scandal involving contract fixing and bribery at the state oil company Petrobras has caused, among other things, the arrest of 18 Petrobras employees and a wide ranging investigation being commenced by Brazil’s securities commission, Comissao de Valores Mobiliaros, into the conduct of Petrobras’ directors and the directors of a number of companies awarded construction contacts by Petrobras.

Although these corporate scandals could be seen as outliers, it appears more likely they mark an increased trend for regulators in India, Brazil and other developing jurisdictions in asserting firmer action against the directors and officers of companies involved in corporate misfeasance and corruption.  This is partly driven by the growth of the middle class and demands for improved governance at the public and corporate levels, as well as tougher sanctions for those who fail to adhere to the standards expected.

Indeed, recent legislation passed in both jurisdictions should have the effect of tightening the regulatory regime faced by companies and their directors with the Indian Companies Act of 2013 establishing for the first time the duties of independent directors, and the Brazilian Clean Companies Act of 2014 subjecting Brazilian companies (and foreign entities with Brazilian offices) to civil and administrative sanctions for bribery of domestic or foreign public officials.

These developments should lead to an increase in the demand for FI and D&O coverage, and may create opportunities for insurers to increase their market share through increasing their customer base.  However, insurers should be cautious and consider seeking appropriate advice so that they properly understand the coverage, claims, and regulatory issues that may arise from accepting risks in developing nations.

10th Circuit Upholds Insurer’s Application of Insured-Versus-Insured Exclusion to FDIC Receiver Claims

Friday, August 28th, 2015

By Kimberly Jackanich, Sedgwick San Francisco

Recently the Tenth Circuit Court of Appeals in BancInsure, Inc. v. F.D.I.C., Case No. 14-3063, 2015 WL 4647980, held that an insured-versus-insured exclusion unambiguously barred claims brought by the FDIC as a receiver against an insured bank’s former directors. The decision universally upheld the reasoning and holdings reached by the United States District Court for the District of Kansas in finding that the plain language of the insured-versus-insured exclusion provided for its extension to claims brought by receivers of the insured, including the FDIC. In reaching its holding, the court rejected the insured’s arguments that a shareholder derivative action exception, and a regulatory exclusion endorsement, in the insured’s policy superseded the insured-versus-insured exclusion or otherwise rendered it ambiguous with respect to claims brought by the FDIC.

The case arises out of a lawsuit filed by the FDIC in its capacity as receiver of the insured bank against the bank’s former directors and officers (D&O) alleging negligence, gross negligence, and breach of fiduciary duty. In response to the lawsuit, the insurer brought suit against the bank seeking a declaratory judgment that it owed no duty of coverage under the insured’s D&O policy pursuant to the insured-versus-insured exclusion in the bank’s policy, which provided:

The Insurer shall not be liable to make any payment for Loss in connection with any Claim made against the Insured Persons based upon, arising out of, relating to, in consequence of, or in any way involving…a Claim by, or on behalf of, or at the behest of, any other Insured Person, the Company, or any successor, trustee, assignee or receiver of the Company…

Neither party disputed that the FDIC brought the lawsuit in its capacity as receiver of the bank. Instead, the Insured argued that, when the insured-versus-insured exclusion was read in light of other policy provisions, in particular the shareholder derivative exception and the regulatory exclusion endorsement, the exclusion was ambiguous as to whether it barred claims asserted by the FDIC.

The Policy included a shareholder derivative action exception which removed from the scope of the insured-versus-insured exclusion “a shareholder’s derivative action brought on behalf of the Company by one or more shareholders who are not Insured Persons and make a Claim without the cooperation or solicitation of any Insured Person or the Company.” Because the FDIC succeeds to all rights of a failed bank, including those of any stockholder, the Insured argued that actions by the FDIC share common characteristics with a shareholder derivative action such that the insured-versus-insured exclusion was inapplicable or at least ambiguous. The court rejected the Insured’s argument, emphasizing the explicit inclusion of “receiver” in the insured-versus-insured exclusion and concluding that the shareholder derivative action exception “cannot overcome the plain language of the policy.”

The Policy also included a regulatory exclusion endorsement, which eliminated a policy exclusion for “any action or proceeding brought by or on behalf of any federal or state regulatory or supervisory agency or deposit insurance organization,” and set forth an aggregate liability cap of $5 million for claims brought by such agencies. The Insured argued that the maximum aggregate liability cap provided coverage over claims previously excluded under the regulatory exclusion such that the endorsement should prevail over the original printed provisions of the Policy, including the insured-versus-insured exclusion. The Insured further argued that the endorsement evidenced “a clear intent to provide coverage” for actions previously excluded under the regulatory exclusion. Rejecting the Insured’s arguments, the court reasoned that, “removing an exclusion is not the same thing as affirmatively providing coverage.” The court further emphasized that an inference of coverage cannot be created from the deletion of an exclusion, especially where the endorsement clearly states the parties’ intent not to vary or waive other limitations of the policy. The court also rejected the Insured’s assertions that the regulatory action endorsement would be rendered meaningless by application of the insured-versus-insured exclusion, stating that “the mere overlap between the two exclusions does not introduce ambiguity into the plain language of the insured-versus-insured exclusion barring coverage of claims by ‘any…receiver of the Company.’”

The court’s holding reaffirms that an endorsement providing additional coverage is still subject to other policy exclusions and limitations, particularly when the endorsement explicitly provides that it does not alter, vary, or waive other policy provisions. Further, the court’s refusal to allow the regulatory exclusion endorsement to supersede the insured-versus-insured exclusion reinforces that courts will interpret policies as a whole. Thus, when endorsements are clear that they only affect designated parts of the policy, insureds may face an uphill battle in their efforts to broadly create affirmative coverage that was not intended by the insurers.

Colorado Supreme Court Holds that the Notice-Prejudice Rule Does Not Apply to Date-Certain Notice Requirement in Claims-Made Policies

Wednesday, February 25th, 2015

By Eryk Gettel, Sedgwick San Francisco

Like many jurisdictions, Colorado’s notice-prejudice rule generally provides that an insured who fails to provide timely notice of a claim does not lose policy benefits unless the insurer establishes that the late notice prejudiced its interests.  Friedland v. Tranvers Indem. Co., 105 P.3d 639, 643 (Colo. 2005).  In Craft v. Philadelphia Indemnity Insurance Co., 2015 WL 658785 (Colo. Feb. 17, 2015), the Colorado Supreme Court held that this rule does not apply to date-certain notice requirements in claims-made policies.

Dean Craft was the principal shareholder and president of Campbell’s C-Ment Contracting, Inc. (CCCI).  Craft agreed to sell a portion of his CCCI shares to Suburban Acquisition Company (Suburban), and later sold his remaining shares back to CCCI.  Suburban and CCCI sued Craft for alleged misrepresentations and fraud regarding the stock sales.

At the time he was sued, Craft was unaware that CCCI had purchased a D&O policy from Philadelphia Indemnity Insurance Company (Philadelphia).  The policy required the insured to notify Philadelphia “as soon as practicable” after becoming aware of a claim, but “not later than 60 days” after the policy period expired.  The policy period was November 1, 2009 to November 1, 2010.  Craft did not report the matter to Philadelphia until March 2012 (more than one year after the policy had expired), and settled the underlying litigation in June 2012.  Philadelphia ultimately denied coverage for Craft’s legal fees and the underlying settlement because Craft had not complied with the policy’s notice provision.

Craft sued Philadelphia in Colorado State Court for breach of contract, breach of the implied covenant of good faith and fair dealing, and statutory violations.  Philadelphia removed the case to federal district court, and then successfully moved to dismiss the coverage action on the basis that Craft did not notify Philadelphia of the claim within 60 days of the policy’s expiration date.  After appealing the district court’s decision, the Tenth Circuit certified the following questions to the Colorado Supreme Court:  (1) whether the notice-prejudice rule applies to claims-made liability policies as a general matter; and (2) whether the rule applies to one or both types of notice provisions in claims-made policies.  Because the parties agreed that the prompt notice requirement was not at issue, the Colorado Supreme Court limited its analysis to the issue of whether the notice-prejudice rule applies to a claims-made policy’s date-certain requirement.  The court answered the question in the negative.

The court first explained how “occurrence” and “claims-made” policies differ in terms of the coverage they provide.  Whereas occurrence policies (like the policy in Friedman)provide coverage for injuries or damage that occur during the policy term regardless of when the claim is actually made, claims-made policies (like the policy in Craft) only provide coverage if the claim is made during the policy period or any applicable extended reporting period.  The court further explained that this conceptual difference is critical to the risks that insurers undertake and the premiums that insureds pay.  With a claims-made policy, the risk to the insurer passes when the policy expires.  Thus, the date-certain requirement in a claims-made policy is a fundamental policy term because it defines the temporal boundaries of the policy’s basic coverage terms.  The court found that, to extend the notice-prejudice rule in the context of a claims-made policy’s date-certain notice requirement, “would defeat the fundamental concept on which coverage is premised.”

The court also rejected Craft’s argument that strict enforcement of the date-certain notice requirement would result in a windfall for the carrier based on a technicality.  To apply the notice-prejudice rule so as to excuse an insured’s noncompliance with a date-certain requirement would essentially rewrite the policy and effectively create coverage where none previously existed.  By doing so, the insured — and not the insurer — would reap the windfall.

UK Court: Directors Insured Under D&O Policies Cannot Avail Themselves of the Financial Ombudsman Service

Tuesday, December 2nd, 2014

By Luke Johnson and Tristan Hall, Sedgwick London

The question of whether directors insured under D&O policies are entitled to complain to the Financial Ombudsman Service (“FOS”) in respect of an insurer’s handling of a claim has been a frequent discussion point for those involved in D&O insurance.  R (on the application of Bluefin Insurance Services Ltd) v Financial Ombudsman Service Ltd [2014] EWHC 3413 (Admin) establishes that it is unlikely that the FOS will be able to entertain such complaints, and directors must rely on the dispute resolution provisions in their D&O policy.

This case concerned the handling of a complaint to the FOS by Mr Lochner (a former director of Betbroker Limited) against Bluefin Insurance Service Limited (“Bluefin”) in connection with the notification of a potential claim to Mr Lochner’s D&O insurer.  Some years after the notification, a claim was actually pursued against him that was not covered under his D&O insurance.

The FOS considered they had jurisdiction to hear the complaint on the basis that Mr Lochner was a consumer.  Bluefin brought judicial review proceedings of that decision.

The court rejected the FOS’s arguments that Mr Lochner was acting as a consumer and determined that the FOS had no basis on which to assert jurisdiction over Mr Lochner’s complaint.  In reaching this view, the Court considered that the claim against Mr Lochner arose out of acts which were undertaken by him as a director and in the course of his (former) business.  Therefore, “the subject matter of his complaint was wholly concerned with the potential loss arising from lack of insurance cover in respect of a liability which [Mr Lochner] has incurred in the course of his trade, business or profession”.

In light of this judgment it is unlikely that the FOS will be entitled to determine complaints made by directors in respect of the main potential liability D&O policies insure against: claims against them arising from actual or alleged wrongful acts committed in their capacity as directors or officers of a company.

However, this is not to say that all disputes in relation to D&O policies will fall outside the FOS’s jurisdiction.  For example, spouses of directors and officers are routinely covered under D&O policies (but only in respect of the directors/officers’ wrongful acts) and their potential liability does not necessarily arise in the course of any trade, business of profession.  Whilst such claims are rare, the court suggested in obiter that it may have reached a different conclusion if Mr Lochner’s spouse had sought to complain.

UK Securities Claims Update

Wednesday, November 26th, 2014

By Tristan Hall. Sedgwick London

At our financial lines seminar in London on 16 October, we considered the question of whether UK Securities claims are finally coming of age.  As part of that presentation, we reviewed the group action brought by investors against RBS and its directors and officers under Section 90 of the Financial Services and Markets Act 2000 (“FSMA”) regarding alleged misstatements made in a prospectus issued by RBS in connection with its rights issue in 2008.  The remedy afforded under Section 90 of FSMA is similar to that provided for under sections 11 and 12 (a) (2) of the Securities Act 1933 in the US.

It now seems likely that another high profile securities claim will be brought before the English Court as, on 25 November, it was reported that the law firm¹ representing one of the Claimant groups in the RBS case intends to file proceedings against Tesco and certain of its directors and senior management in connection with its recent announcement that the company had overstated its profit by £263 million.

It seems probable that the Tesco claim will proceed under Section 90A of FSMA, which covers misstatements or omissions in an issuer’s periodic financial disclosures or in information published to the market by means of a recognised information service.  The remedy afforded under Section 90A of FSMA is similar to that provided for under sections 10b and 18 of the Securities Exchange Act 1934 in the US.  Indeed, a putative class action already has been filed against Tesco and certain of its directors in New York federal court for and on behalf of purchasers of Tesco ADRs alleging violations of the Securities Exchange Act 1934.

Assuming the Tesco claim proceeds, then there will be two high profile claims before the English Courts that, for the first time, seek to test the remedies afforded to investors under FSMA.  The outcome of both claims will therefore be of significant interest to UK publicly traded companies, their directors and D&O insurers.

Another interesting feature of both claims is that they are being supported by litigation funding.  As we suggested at our seminar, the availability of litigation funding is likely to be a driver of UK securities litigation in the future.

 


 

¹ Stewarts Law – http://www.stewartslaw.com/tesco-to-face-legal-claim-from-shareholders-over-its-overstatement-of-profits.aspx

 

Banks Settle with U.K. Regulatory Authority Over Forex Manipulation

Wednesday, November 12th, 2014

Today it was announced that six banks settled with the U.K. Financial Conduct Authority and other regulators for a combined total of approximately $4.3 billion for their roles in the manipulation of the $5.3 trillion-a-day Forex market.  The six banks involved in the settlement include Citigroup, UBS, HSBC, Royal Bank of Scotland, JP Morgan and Bank of America.  While the settlement is larger than fines levied to date in connection with the Libor scandal, this may be just the beginning.  For example, Barclays was not part of these initial settlements and is reportedly still under investigation.  Further, the settlement does not include a settlement with many of the U.S. regulators that are conducting their own investigations, including criminal investigations by the U.S. Department of Justice which will likely involve individuals at the various banks.  The banks that settled today likely wanted to get ahead of the curve to limit their exposure as much as possible.  From the size of the fines, there must have been strong evidence against traders which resulted in the banks considering a settlement at this stage.  Additionally, the banks also face civil litigation in the U.S., which if successful could also present large exposures.  Click here to see an article from January 2014 authored by Sedgwick Chicago’s Jennifer Quinn Broda and Eric Scheiner on the regulatory scrutiny and potential insurance implications.

Sedgwick Attorneys
Sedgwick’s insurance attorneys regularly present to clients and other industry professionals on a wide range of topics. For a complete list of our attorneys, click here.
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