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Exclusion Bars Coverage for Losses in Madoff’s Ponzi Scheme

The First Department in United States Fire Ins. Co. v Nine Thirty FEF Invs., LLC,  reversed the lower court and found that exclusion x, in a financial institution bond, which excludes coverage for losses “resulting directly or indirectly from any dishonest or fraudulent act or acts committed by any non-Employee who is a securities . . . broker” , barred coverage for the losses caused by the Madoff Ponzi scheme.  The court held that Mr. Madoff Investment Securities LLC was a registered broker-dealer during the entire period in which it dealt with the defendants and that the exclusion unambiguously barred coverage. Read more…

By Rosa M. Feeney, Esq.

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