Securities law is a highly specialized practice area. Attorneys doing private and public offerings need to be aware that not all insurers cover this exposure. The body of the policy may not have an exclusion such as the following:
“any claim involving a public offering or sale, registration, or qualification of securities under any federal, state, or local law, rule, or regulation, including, without limitation, the Securities Act of 1933, as amended, the Securities Act of 1934, as amended, and any and all rules and regulations promulgated under any or all of the foregoing laws;”
None the less this does not mean that this insurer’s policy provides appropriate securities work coverage. The underwriter through the application questions and the areas of practice will ferret out securities work. The insurer appetite for securities work may range from not any to being okay with public or private offerings and opinions.
Insurers open to covering securities work will likely have a specific securities supplement that asks specific questions related to the size and types of offering plus the type of securities work. If the application does not ask specific questions about securities work the securities attorney should look closely at the policy and proposed endorsements. Premiums that are too good to be true should alert the firm that there is no intent by the insurer to cover securities work
Insurers that offer coverage for securities practices charge accordingly for the coverage.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080