ponzi scheme Archives - The Insurance & Reinsurance Report

Logical Construction: Federal Court Relies on Practical Considerations in Finding No Coverage for Lost Future Earnings

In 3M Co. v. National Union Fire Insurance Co., 2015 U.S. Dist. LEXIS 131197 (D. Minn., September 28, 2015) a federal judge for the District of Minnesota determined that a policyholder was not entitled to coverage for earnings on its investment in a trading company engaged in a Ponzi scheme because it did not own the earnings.

The policyholder invested its employee-benefit plan assets in the trading company. The investment took the form of a limited partnership in the trading company. In 2009, …

July 6, 2015 Policy Conditions, Considerations, Construction, and Formation

New York Appellate Division Finds No Coverage Under Bond For Losses Arising From Madoff’s Ponzi Scheme

In Jacobson Family Investments, Inc. v. Nation Union Fire Insurance Co. of Pittsburgh, PA, 2015 N.Y. App. Div. LEXIS 5175 (1st Dep’t; June 18, 2015), the New York Appellate Division, First Department reversed the Supreme Court, New York County’s decision and found that National Union Fire Insurance Company of Pittsburgh, PA is not required to pay the claimant for losses arising out of Bernie Madoff’s infamous Ponzi Scheme.

National Union provides coverage to the insured pursuant to a Financial Institute Bond. The insuring agreement …

April 22, 2015 Professional Liability

No Coverage for Financial Firm that Invested Clients’ Money in Ponzi Scheme

A securities firm sought coverage under a professional liability policy for claims by customers that suffered losses on real estate investment vehicles. The Panel for the Second Appellate District in California found that the policyholder was not entitled to coverage because the “application exclusion” in the firm’s policy bars coverage for the claims asserted, as the policyholder did not disclose the facts of the claims against it to the insurer in its application.

The claimants brought suit, asserting that the policyholder failed to properly vet …

October 7, 2013 Policy Conditions, Considerations, Construction, and Formation

Insurer on Hook for $10 Million in Investments With Madoff

Unites States Fire Ins. Co. v. Nine Thirty FEF Investments, LLC
Supreme Court of the State of New York: Commercial Part 48, October 1, 2013
The Supreme Court of the State of New York: Commercial Part 48 held that U.S. Fire Ins. Co was on the hook for approximately $10 million of investments deposited with Bernard Madoff. The court held that the losses caused by the Ponzi scheme were not barred from coverage by the dishonest securities brokering exclusion.

The defendants are private limited liability …