Recording Date: August 19, 2009
Duration: 95 minutes
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Agenda and Speakers
Financial Institutions and Crime Policies
• Who is being sued? Who might be sued?
– “Feeder Funds” and “Funds of Funds”
– Investment Advisors
– Lawyers who advised, reviewed/certified prospectuses or did transactional work for Ponzi funds, feeder funds, or investment advisors
– The SEC
– Early paid investors
Ponzi Schemes – Causes of Action and Claims Alleged, Including
• Securities fraud
• Common law fraud
• Fraudulent/negligent misrepresentations
• Conversion and unjust enrichment
• Breach of fiduciary/trustee duties
• Investment Company and Investment Advisor Act violations
• Negligence/gross negligence
• Preference payment claims under bankruptcy laws
Possible Insurance — Types of Coverage Implicated, Including
• Specialized or miscellaneous E&O
• D&O and E&O
• Fiduciary/Trustee liability
• SIPC funds and any SIPC excess insurance
• Pension/fiduciary liability
• Fidelity bonds
• ‘Discovery’ bond
• ‘Loss sustained and discovered’ form
• Who is a “covered” employee?
• Direct loss
• Alter Ego: Acts committed by you or your partners
• Trading losses
E&O and D&O
• Who is an insured, and what is a claim?
• What is a ‘wrongful act”?
• What are ‘professional services”?
• What constitutes a loss?
• Potential exclusions, including fraud and profiteering
• Rescission issues
• Other insurance clause and priority of payments clause
• Side-A coverage issues
• Exhaustion in excess policies
• Application representation/warranties
• Rescission issues
Other Potential Insurance Sources
– Homeowners/Umbrella coverage
– SIPC excess insurance
– General liability
• Pension/fiduciary wrongful acts
• Inter-related wrongful acts and related claims
Richard J. Bortnick, Esq., Cozen O’Connor, West Conshohocken, PA
Kevin Mattessich, Esq., Cozen O’Connor, New York
James Murray, Esq., Dickstein Shapiro LLP, Washington, DC