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Nine Thirty FEF Investments: New York Appellate Division applies Financial Institution Bond’s Securities Broker Exclusion to Madoff Ponzi Losses

In United States Fire Insurance Company v. Nine Thirty FEF Investments, LLC, the New York Supreme Court, Appellate Division, held that Financial Institution Bonds did not cover losses sustained in a Ponzi scheme orchestrated by Bernie Madoff.  Drawing on its own recent decision in Jacobson Family Investments, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa. … Continued

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3M: U.S. District Court applies Ownership Provision in finding No Coverage for Loss of Undistributed Limited Partnership Earnings in Investment Fraud

In 3M Company v. National Union Fire Insurance Company of Pittsburgh, PA, the U.S. District Court for the District of Minnesota considered and applied a crime policy’s Ownership Provision in concluding that the insured did not have coverage for the loss of investment earnings suffered when an investment entity in which it had a limited partnership … Continued

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Hantz Financial Services: U.S. District Court applies “Direct Means Direct” Approach in Finding No Coverage for Third-Party Losses under Financial Institution Bond

In Hantz Financial Services, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA., the U.S. District Court for the Eastern District of Michigan held that a Financial Institution Bond did not provide coverage to a financial services firm in respect of frauds perpetrated by an employee upon the firm’s clients. The decision is notable in … Continued

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Jacobson Family Investments: New York Appellate Division interprets Scope of Financial Institution Bond’s Investment Advisor Coverage and Securities Broker Exclusion

On June 18, 2015, the New York Supreme Court, Appellate Division released its decision in Jacobson Family Investments, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa. This decision examines the interplay between a Financial Institution Bond’s Outside Investment Advisor coverage rider and the Securities Broker exclusion, in the context of a loss resulting from … Continued

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First National Bank of Northern California: Ninth Circuit analyzes scope of “Customer” under Financial Institution Bond’s Telefacsimile and Voice Instruction Transactions Coverage

In First National Bank of Northern California v. St. Paul Mercury Insurance Company, the Ninth Circuit Court of Appeals analyzed certain requirements for Telefacsimile and Voice Instruction Transactions coverage under a Financial Institution Bond issued by St. Paul (now Travelers) to First National Bank of Northern California (the “Bank”). The decision highlights the importance of clearly … Continued

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Tesoro Refining: U.S. District Court analyzes scope of “Unlawful Taking” and “Forgery” under Employee Theft Coverage in Commercial Crime Policy

On April 7, 2015, the U.S. District Court for the Western District of Texas released its decision in Tesoro Refining & Marketing Company LLC v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The decision analyzes what constitutes “unlawful taking” for the purposes of the Employee Theft coverage, and also provides guidance with respect to the … Continued

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Highland Bank: Eighth Circuit affirms Necessity of Bank’s Direct Reliance on Personal Guarantee under Financial Institution Bond’s Securities Coverage

On March 3, 2015, the Eighth Circuit Court of Appeals released its decision in BancInsure, Inc. v. Highland Bank. The decision provides guidance with respect to (i) what constitutes a “direct loss” under the Securities Coverage of the Financial Institution Bond; and (ii) the nature of the reliance required for an insured to demonstrate that it … Continued

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Bank of Brewton: Eleventh Circuit affirms Financial Institution Bond’s Distinction between Counterfeit Documents and Fraudulently-Procured, but Authentic, Documents

On February 9, 2015, the Eleventh Circuit Court of Appeals released its decision in Bank of Brewton v. The Travelers Companies, Inc. The Court’s decision reinforces the distinction between counterfeit documents and documents which, although fraudulently-procured and without intrinsic value, are nonetheless authentic. The Facts The Bank of Brewton (the “Bank”) is a private bank located … Continued

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