This document discusses insurance coverage for claims arising from the Madoff investment scandal. It notes that many businesses and their directors and officers may receive claims for investor losses related to investments with Bernard Madoff. It recommends that any business with dealings connected to Madoff promptly review applicable insurance policies like directors and officers liability and errors and omissions policies to understand coverage. It also provides examples of claims that may be covered, such as those against directors and officers, hedge funds that invested clients' money with Madoff, and accounting firms that audited feeder funds. It advises businesses to submit insurance claims promptly, be aware of reporting deadlines, and notify insurers of any claims or potential claims.

1. Insurance Coverage & Recovery Practice Group
Page 1 of 2
January 6, 2009
Insurance Coverage for Claims Arising Out of
The Madoff Investment Scandal
We are sending this client alert because many businesses and their
directors and officers are just now receiving (or may in the near
future receive) notice of claims and/or circumstances suggesting the
likelihood of claims against them for investor losses incurred in
connection with investments in funds run by Bernard L. Madoff
(Madoff). Any business that had direct or indirect business dealings
with Madoff would be wise to promptly assess the extent of the
protection afforded by its liability insurance program and, in
particular, its directors and officers liability and errors and
omissions liability insurance policies, and may want to consider
speaking with coverage counsel to avoid potential pitfalls in
pursuing insurance claims.
Among the many types of claims arising out of the Madoff scandal
that may be covered by insurance are:
Claims against directors and officers of business and
institutions that invested with Madoff.
Claims against hedge funds, outside brokerages, and
investment advisers that invested their clients’ funds with
Madoff.
Claims against accounting firms that performed audits on
feeder funds that invested their clients’ funds with Madoff.
It is important for businesses to evaluate and submit insurance
claims promptly and to keep the following recommendations in
mind in order to maximize insurance recovery:
Locate all potentially applicable insurance policies and
review coverages with an insurance coverage lawyer.
Be familiar with cut-off dates in “claims made” insurance
policies. In most states, failure to give notice prior to the
For more information, contact:
Martin M. McNerney
(202) 626-5447
mmcnerney@kslaw.com
John H. Fontham
(202) 626-5543
jfontham@kslaw.com
King & Spalding
Washington, DC
1700 Pennsylvania Avenue, NW
Washington, DC 20006-4706
Tel: (202) 737-0500
Fax: (202) 626-3737
www.kslaw.com

2. Insurance Coverage & Recovery Practice Group
Page 2 of 2
end of the reporting period specified in a claims made policy may be an absolute defense to
coverage. For programs that renew around the beginning of the year, cut-off dates likely are fast
approaching.
Be aware that “claims” are not limited to lawsuits. Insurers will argue that the notice obligation can
be triggered by receipt of a written demand or even a request to toll or waive the statute of
limitations. In the same way, insurance policies may cover not only the costs to defend and resolve
lawsuits, but also the costs to respond to governmental subpoenas or investigations.
Be aware that seemingly obscure claims can later mushroom into significant claims. Don’t put off
notifying your insurance carrier simply because you think a claim presents minimal damages
exposure or can be defeated on the merits.
We work closely with our clients and their risk managers to handle directors and officers and professional
liability insurance claims and have helped many businesses and financial institutions collect from their
insurers for losses arising from these types of claims.
King & Spalding is an international law firm with more than 880 lawyers in Abu Dhabi, Atlanta, Austin, Charlotte, Dubai, Frankfurt, Houston, London, New
York, Riyadh (affiliated office), San Francisco, Silicon Valley and Washington, D.C. The firm represents half of the Fortune 100 and in Corporate Counsel surveys
consistently has been among the top firms representing Fortune 250 companies. For additional information, visit www.kslaw.com.
This alert provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.