Last week, federal authorities arrested Bernard L. Madoff in connection with what appears to be an investment fraud of epic proportions, possibly totaling $50 billion. On December 15, the Securities Investor Protection Corporation(the “SIPC”) announced that it will be liquidating Bernard L. Madoff Investment Securities LLC under the Securities Investor Protection Act. The SIPC also filed an application in New York federal court requesting certain investor protections available under the Act. SIPC Release.

Civil lawsuits have now been filed against investment funds, fund managers and auditors alleging fraud, negligence, recklessness, and breach of fiduciary duties. Such lawsuits may be covered in many instances by E&O and/ or D&O policies. Corporate policyholders with any potential exposure to the Madoff fraud should take steps to better understand and assess their potential insurance coverage. Orrick Client Alert.

 

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