FCL Fidelity Blog

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Nine Thirty FEF Investments: New York Appellate Division applies Financial Institution Bond’s Securities Broker Exclusion to Madoff Ponzi Losses

In United States Fire Insurance Company v. Nine Thirty FEF Investments, LLC, the New York Supreme Court, Appellate Division, held that Financial Institution Bonds did not cover losses sustained in a Ponzi scheme orchestrated by Bernie Madoff.  Drawing on its own recent decision in Jacobson Family Investments, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa. (which we discussed in our June 23 post), the Court held that the Securities Broker exclusion brought the loss outside the Bonds’ Outside Investment Advisor coverage, notwithstanding  the insureds’ argument that the coverage and the exclusion could not both operate without resulting in

Jacobson Family Investments: New York Appellate Division interprets Scope of Financial Institution Bond’s Investment Advisor Coverage and Securities Broker Exclusion

On June 18, 2015, the New York Supreme Court, Appellate Division released its decision in Jacobson Family Investments, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa. This decision examines the interplay between a Financial Institution Bond’s Outside Investment Advisor coverage rider and the Securities Broker exclusion, in the context of a loss resulting from Bernie Madoff’s Ponzi scheme. The Facts Jacobson Family Investments (JFI) managed the assets of several companies, including MDG 1994 Grat LLC (MDG). In 2008, JFI submitted a claim to National Union for losses, including losses to MDG, allegedly sustained as a result of the