In an insurance coverage dispute arising out of the high-profile and long-running SEC investigation of and enforcement action against the investment firm Patriarch Partners and its CEO Lynn Tilton, a federal district court judge has ruled that coverage under Patriarch’s excess D&O insurance policy is precluded under the policy’s “Pending and Prior Claim” exclusion, because the investigation pending at the time the excess policy incepted represented a “Claim” under the relevant policy language. The court’s analysis includes an interesting discussion of the interaction between the SEC’s investigative actions and the applicable definition of the term “Claim.” The court’s analysis also involves a consideration of the implications for coverage purposes of the various stages within the SEC’s investigative processes. Southern District of New York Judge Valerie Caproni’s September 22, 2017 opinion can be found here.
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In a sweeping July 1, 2011 opinion in MBIA’s favor, the Second Circuit held that the company’s D&O insurance policies cover the investigative and special litigation expense the company incurred during a regulatory investigation of its accounting practices. This case had been closely watched in the D&O insurance community because of widespread carrier concerns over

Among perennial D&O insurance issues are questions whether policy coverage is available for defense expenses incurred in connection with investigative costs, subpoenas and the costs associated with special litigation committees. A December 30, 2009 decision in the coverage lawsuit brought by MBIA against its D&O insurers considered all of these recurring issues, and reached some