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For those with directors and officers (“D&O”) insurance, a recent decision from a federal appellate court will be of keen interest as it strengthens coverage when faced with governmental subpoenas and Special Litigation Committee (“SLC”) board reviews. This decision is an important victory for policyholders and should serve as a helpful check on scope of coverage during a company’s next D&O renewal.
This past summer the United States Court of Appeals for the Second Circuit ruled in favor of policyholder MBIA, Inc. (“MBIA”), regarding insurance coverage under D&O insurance policies for three separate categories of expenses often incurred by companies involved in government investigations and shareholder derivative actions. Associate Brian S. Scarbrough examines these in categories and their implications in this advisory.