As the U.S. Securities and Exchange Commission (SEC or Commission) ramps up its efforts to investigate corporate accounting and financial malfeasance in the wake of the current financial crisis, U.S. companies and their directors and officers may find themselves the subject of a formal or informal investigation. They will, in turn, look to their Directors & Officers (D&O) insurance policies to fund the high legal costs incurred in responding to investigations. As recent case law demonstrates, coverage for such expenses, in a given case, will likely depend on whether the specific investigatory action falls within the policy’s definition of a “claim.”
D&O Policies Provide Coverage for a “Claim”
The Chronology of an SEC Investigation
Questions to Ask After Office Depot and MBIA
— (A) What is the Nature of the Investigatory Action?
— (B) What Is the Specific Language Used in the Policy?
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