In August of 2008, a major hedge fund shuttered its flagship fund and closed several smaller funds, which became the first in a string of prominent fund closures over the next two and half years. Many funds were suffering from redemptions and reallocations by their investor base and were forced to shut down.
How the proliferation of bankruptcy has impacted the Directors and Officers market place and how Venture Firms can protect their Outside Directors
Venture Capital, one of the main drivers of private investment in this country, has seen radical changes to the business landscape in the past three years. The economic downturn has forced many of their portfolio investments to file for bankruptcy costing the firms hundreds of millions of dollars, not to mention their limited partners and the founders of their invested entities. What happens when a company is shuttered? Who is responsible for the wind down? What happens to the founders and employees? What about the Venture firm, are they held accountable? The ripple effect of a portfolio company’s bankruptcy can have a myriad of implications for the various stakeholders in the game and raises important questions about the insurance structure in place to help save and protect the Venture firms’ assets as well as the assets of the portfolio company’s Directors and Officers.
New Risks that Make Hedge Fund Liability Insurance a Must
The hedge fund industry is undergoing a period of explosive growth, and many people are getting caught up in the buzz. With all the new competition for capital, heightened consumer expectations in terms of performance, and ever-stricter due diligence standards, the explosion of the hedge fund industry has opened up a whole new world of risk for hedge fund managers and investors. Continue reading
What Hedge Fund Managers and Directors Need to Know About Their Liability
Rick Maloy hosted and moderated a webcast panel discussion for the Managed Fund Association (MFA) this year that focused on the litigation and regulatory trends of the hedge fund industry, while simultaneously providing practical advice on risk mitigation and risk reduction. The panel consisted of three insurance professionals that included Rick Maloy and one legal expert on SEC litigation, policy negotiation and construction. The discussion topics concentrated on Regulation, Key Exposures, Policy Construction, Claims Trends, and the Changing Insurance Landscape. This article is an overview of the webcast discussion, which was attended by 100 hedge fund managers.
Hedge Fund Management Liability: What Risks Do You Face?
t’s easy to see that the hedge fund industry has changed– the institutionalization of the industry brought about by greater investor due diligence, more stringent regulatory controls and transparency has helped redefine the industry. More opportunity for bold hedge fund managers to chase return means more risk and liability as well. In this environment, a limited and often outdated hedge fund directors and officers/professional liability policy can be extremely dangerous in this new world.
How Cyber Security and Privacy have impacted the Errors and Omissions market and what can companies do to protect their networks and client data
Hacks, breaches, stolen data, trade secrets hi-jacked, privacy violated, ransom demands made; how can you protect your data or your clients’ data in the modern age? Since 1995, the digital age has created a host of new challenges for every type of company, not just the technology world. Your web presence can be a minefield for you and your clients. Do you have sensitive client data on your systems? Do you have sensitive employee data on your systems? Do you allow clients to access your systems? What controls are in place internally for employee access to client data or your own corporate trade secrets? How Secure Is Your Network? The list of questions goes on and on.
Risks Beyond E&O: Cyber Security Cover can protect your business clients lurking technology exposures
Data breaches of sensitive client information, hackers, viral infections, and crisis management to restore one’s good reputation are the new concerns facing the worldwide business owner. Errors & Omissions insurance, the perennial mainstay of third party financial protection for businesses, may not be enough coverage for today’s high technology climate. Cyber Security cover is the cure.
Life Science & Product Recall Risk Management
Life Science & Product Recall Risk Management Insurance is just one piece of risk management. There are also procedures, contractual transfer and other aspects of minimizing risks that can be associated with a product recall or product withdrawal in the Life Science industry. These include the recall of a drug or a medical device, whether implantable or external—and could cost companies millions in litigation, in addition to recall costs, if handled improperly.
Manufacturers generally buy the basics: product liability insurance, workers comp, and property insurance. Yet product recall or withdrawal is a real risk that some may choose to self-insure. Either they don’t really believe such an event will happen, or they feel that they have a good follow-up procedure in place if it should.
That may not be enough. If there is a claim or a product recall—which can and does happen to the best of companies—a Life Science manufacturer can simply look to its insurance company instead of using company assets to fund the recall. Premiums start around $15,000.
Top 10 Tips for Hedge Fund Cover
Richard Maloy explains what all hedge fund managers and directors need to know about their liabilities
At the end of 2008 the insurance industry was scared. The litigation cost estimates due to failed banks, the implosion of mortgage real estate investment trusts (REITs) and the collateralized debt obligation (CDO) meltdown were in the hundreds of billions of dollars, which sent prices skyrocketing for D&O and professional liability. The price for the first $5mn of coverage was $20,000 per million in 2007 and moved to $30,000-$35,000 in 2008, especially for any fund that showed poor performance and large redemptions. Continue reading
Whistling at Work
By DAN REYNOLDS, senior editor of Risk & Insurance®
Directors’ and officers’ liability (D&O) insurance coverage for the financial sector has had its share of scares in the past few years. Continue reading
