In a number of recent posts (most recently here), I have emphasized the importance of the wording of the securities exclusion in private company D&O insurance policies. A recent case out of Florida underscores the importance of the securities exclusion wording and illustrates how an unusual wording can lead to the preclusion of coverage for claims that might otherwise be covered. The decision also highlights the extent of the preclusionary effect from exclusions written on a very broad basis. Middle District of Florida Judge William Jung’s January 2, 2019 decision can be found here. A March 5, 2019 Law 360 article from the Jenner & Block firm about the decision can be found here.
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In a January 23, 2018 unpublished decision (here), the Eleventh Circuit held that a D&O insurance policy’s prior acts exclusion does not preclude coverage where the subsequent claim against insured persons is “independent” from the alleged wrongful acts that occurred prior to the policy period. The appellate court’s opinion, in which it affirmed a district court’s ruling rejecting a D&O insurer’s argument that the exclusion precluded coverage for the FDIC’s claim against the former directors and officers of a failed bank, underscores the necessity for a link between the prior wrongful acts and the subsequent claim in order for the exclusion to preclude coverage for the claim. The Carlton Fields law firm’s February 26, 2018 memo about the decision can be found here.
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