Reed Smith Client Alerts

Policyholders need to be aware of a recent Tenth Circuit decision, MusclePharm Corp. v. Liberty Insurance Underwriters, Inc. No. 16-1462, 2017 WL 4675701 (October 17, 2017), which calls into question whether and when a D&O policy will respond to a government investigation. Currently, there is a split among jurisdictions regarding coverage for government investigations, with the Tenth Circuit now falling into the no coverage camp. This ruling highlights the importance of understanding the scope of investigative coverage your company is purchasing and the requirements for triggering coverage thereunder.

Autoren: Lilit Asadourian Paul R. Walker-Bright Jessica E. Brown

Type: Client Alerts

When the Securities and Exchange Commission (“SEC”) or other government agency launches an investigation, companies can spend millions of dollars in response to the agency’s subpoenas and other requests for documents and information. Many D&O policies purport to insure the fees and costs companies incur in responding to government investigations. However, policyholders seeking insurance coverage for such fees and costs need to be aware of a recent Tenth Circuit decision, MusclePharm Corp. v. Liberty Insurance Underwriters, Inc. No. 16-1462, 2017 WL 4675701 (October 17, 2017), which calls into question the scope of coverage for investigation response costs. This ruling, which turned heavily on the policy language in MusclePharm’s D&O policy, highlights the importance of understanding the scope of investigative coverage your company is purchasing and the requirements for triggering coverage thereunder.