Insurance Coverage Litigation Arising from the Financial Crisis
Recorded: March 18, 2009
Location: The Harvard Club of New York City
Co-Chairs: Walter Andrews, Esq., Hunton & Williams LLP, McLean, VA
Matthew Jacobs, Esq., Jenner & Block LLP, Washington, DC


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Agenda and Faculty

Welcome & Introductory Remarks
Walter Andrews, Esq., Hunton & Williams LLP, McLean, VA
Matthew Jacobs, Esq., Jenner & Block LLP, Washington, DC

Who is Filing Claims, Who is Being Sued and What Causes of Action Are Being Asserted?
• Claims by shareholders of almost all large financial institutions against those companies and their directors and officers
•     Claims by holders of subprime-backed bonds and CDOs against the issuers, underwriters, sellers, and trustees of those instruments
•     Claims by beneficiaries of ERISA pensions plans against the trustees, administrators, and asset managers of those funds
• Causes of action under the Securities Act of 1933, Securities Exchange Act of 1934, ERISA, and the common law of fraud and negligent misrepresentation
David Grais, Esq., Grais & Ellsworth LLP, New York
Anand Raman, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC

Bernie Madoff and Satyam – the New Ponzi and Enron Redux?
•     Class Actions and third-party investor suits
•     Clawbacks
•     Tax litigation
•     Due diligence questions – did institutional investors and hedge funds do everything they could to protect their clients’ interests?
•     How hedge funds and banks can avoid exposure to law suits
Stuart Singer, Esq., Boies, Schiller & Flexner LLP, Fort Lauderdale, FL
Howard Suskin, Esq., Jenner & Block LLP, Chicago

What Kinds of Damages Are Being Sought and How will Damages be Measured?
•     Damages by the type of claim
•     Alternative notions of the “but for” world
Faten Sabry, PhD, Senior Vice President, NERA Economic Consulting, New York

What Types of Insurance Policies May Be Available for Claims Arising from the Financial Crisis – An Overview
•     A description of the policies — D&O, E&O, other professional liability, other coverages and howthey work — general, standard terms and conditions
•     Terms, conditions, provisions, and exclusions
William Skinner, Esq., Covington & Burling LLP, Washington, DC

Coverage Issues Most Likely to Arise from Credit Crisis Claims, including the Application (or Not) of Various Exclusions and Limitations to Coverage
•     Notice Provisions
•     Duty to defend v. duty to reimburse and all related issues (panel counsel)
•     Settlements and Issue of Consent to Settlements
•     Exclusions: Fraud and Dishonesty; Prior Acts; Personal Profit; Insured v. Insured; and “Related” Claims
Lorelie Masters, Esq., Jenner & Block LLP, Washington, DC
Lon Berk, Esq., Hunton & Williams LLP, McLean, VA

Failed Financial Institutions and the Impact on Insurance Coverage Issues
Timothy Burns, Esq., Perkins Coie, Madison, WI

Underwriting Considerations and New Policies or Exclusions Resulting from the Crisis
Greg Flood, President, IronPro, New York
Michael White, Senior Vice President , Executive Risks, Willis HRH, New York
Steve Shappell, Managing Director, Financial Services Group, Legal & Claims Practice, AON Risk Insurance Services West, Inc., Denver

Government Investigations and Insurance Coverage
•    Is the service of a subpoena for the production of documents a “claim”?
•    What if the first notice to the policyholder is a request for voluntary compliance?
•    What happens when the investigation becomes a “formal order of investigation”?
•    Defense Issues
•    Settlement Issues
Rina Carmel, Esq., Carlson, Calladine & Peterson LLP, Los Angeles

A Case Study: Claims Against Hedge Funds – Will They Be Covered?
•     Damages – Disgorgement, Restitution or Remediation
•     Hedge funds, including their advisors and general partners, are a prime target of the more than 600 pending lawsuits following the subprime mortgage meltdown and the global credit crisis. Allegations against hedge funds include misrepresentation regarding the security of investment packages, failure to follow investment guidelines, bad pricing based on a known-high risk of securities, negligence in not diversifying investment portfolios, and even fraud.
•     Many hedge funds have E&O or professional liability policies which could be triggered. The insurance industry reportedly is facing at least $3.7 billion in E&O exposure due to the subprime mortgage litigation, and may take an aggressive view toward paying claims. Key terms at issue may include the definition of professional services and certain exclusions, including the “conduct” and “investment banking” exclusions.
•     Hedge funds should prepare to aggressively pursue their insurance claims, and even fight, to ensure they receive the benefits of the coverage they purchased.
Matt Schlesinger, Esq., Reed Smith, Washington, DC
Dan Bailey, Esq., Bailey & Cavalieri LLC, Columbus, OH