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