It is reported by usually reliable sources that the Federal Deposit Insurance Corporation is about to institute a change in its policy. Reportedly, the FDIC plans to sue Officers and Directors of "failed banks" to recoup funds they received before the banks failed. See Chad Hemenway, "D&O Liability/FDIC Plan to File Lawsuits Creates D&O Policy Coverage Questions" p. 8 (National Underwriter P&C, October 18, 2010). The FDIC policy plan raises Directors and Officers Insurance Coverage Issues.
One such issue is whether there is anything left on these Directors' and Officers' Liability Coverage. Reportedly these Policies have already responded to "securities lawsuits" in which Breach of Fiduciary Duties was alleged based on the same or similar transactions. See id.
Another issue involves "a regulatory exclusion" under which D&O Insurance Coverage is apparently excluded, in basic and simple terms, for actions filed by administrative or regulatory agencies. Another such issue involves a Coverage grant in the first place for Claims in which "fraud or dishonesty" are alleged, requiring a "final adjudication" in order for Coverage to be triggered concerning such Claims. See id.
Time will tell how these and other related Coverage Issues will play out in the Courts.
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