The New York Court of Appeals’ Vigilant Decision: A Welcome Return to Enforcing Insurance Contracts as Written


In a much-anticipated decision, New York’s highest court, the New York Court of Appeals, on June 11, 2013, unanimously rejected a group of insurers’ attempt to invoke purported “public policy” considerations to avoid covering a settlement between a former broker-dealer and clearing firm and the Securities and Exchange Commission (“SEC”). The opinion in J.P. Morgan Securities Inc. v. Vigilant Insurance Co., No. 113 (N.Y. Ct. App. June 11, 2013), is welcome news for policyholders forced to deal with the insurance industry’s increasingly aggressive assertions of purported “public policy” principles to disavow obligations imposed under insurance contracts, especially when seeking coverage for “disgorgement” claims asserted by government authorities and private parties.

Background -

The underlying claims giving rise to the coverage dispute involved allegations that a former broker-dealer and clearing firm (the “Insureds”) improperly facilitated “late trading” and “market timing” on behalf of certain of their customers. The SEC’s investigation into these matters was resolved through an Order pursuant to which the Insureds agreed to...

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© K&L Gates LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.