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Financial Institutions

The risks facing investment professionals today are enormous. In a volatile stock market with high profile economic failures, and a complex maze of regulatory requirements, have given rise to business threats posed by exposure to litigation and fraud.

Macquarie Insurance Brokers are able to offer a packaged insurance policy which allows you to choose a combination of tailored coverage’s specifically designed to meet the particular exposures prevalent in the financial services industry. These include:

• Professional Indemnity insurance covers civil liability breaches of a financial institution during the provision of its professional service.
• Directors and Officers insurance covers the breaches of financial institution directors or officers whilst carrying out their duties as company directors or officers.
• Crime insurance covers a financial institution of losses arising from its day-to-day transaction business.

Investment management professionals can face claims related to:

• Misstatement of financial results
• Misleading sales practices
• Violations of management contracts
• Non-fraudulent misrepresentations
• Breach of fiduciary duties
• Violation of federal regulations
• Mismanagement of customer accounts

Claims Scenarios

An investment advisor was sued by multiple former clients who alleged that the advisor's marketing agreement with a large broker-dealer resulted in a conflict of interest which caused losses to their accounts. The clients claimed that the adviser improperly steered them to mutual funds managed by this large broker-dealer. The lawsuit was settled pre-trial for $481,000.

Several lawsuits were filed against an investment manager who inadvertently violated an account management agreement and over-concentrated client accounts in a single stock. This stock rapidly lost value during the period of over-concentration, resulting in losses to claimants. The defense fees, settlements and judgments came to $332,000.

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