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Top Ten Most Important Things Investment Advisers and Broker-Dealers Need to Know About Their E&O Insurance

Top Ten Most Important Things Investment Advisers and Broker-Dealers Need to Know About Their E&O Insurance

May 29th, 2013

FOR IMMEDIATE RELEASE

LOU D'AGOSTINO, PARTNER & SVP WAS RECENTLY PUBLISHED IN THE MOST RECENT EDITION OF "PRACTICAL COMPLIANCE & RISK MANAGEMENT FOR THE SECURITIES INDUSTRY"

Article was entitled: "Top Ten Most Important Things Investment Advisers and Broker-Dealers Need to Know About Their E&O Insurance". Link to PDF Article is below.

Article Excerpt:

"When first asked to do this article, I thought, no problem. I can highlight and pinpoint the ten (10) most important provisions in errors and omissions (“E&O”) policies for both investment advisers and Broker- Dealers and the article would be complete. Right? Not exactly.

Surprisingly, the E&O insurance marketplace for registered Investment Advisers is separate, distinct and vastly different from the insurance market for stand-alone Broker-Dealers. Not only is the insurance marketplace different, but the type of coverage afforded under both policies is also substantially different. For example, the policy forms for Investment Advisers were manuscripted and drafted to address the liability exposures typically faced by a closely-held stand- alone Registered Investment Adviser. As such, most forms tailored to the advisory industry include coverage options for Directors & Officers Liability, Mutual Fund or Investment Fund Liability as well as a variety of other coverage extensions which could be either selected or added via endorsement. This is not the case for policies for FINRA-registered Broker-Dealers. Broker-Dealer policies usually will contemplate Errors and Omissions coverage for the Broker-Dealer entity and the various registered representatives. They will also include “Failure to Supervise” coverage for the entity. All other coverage extensions are usually added via endorsement. "

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