Fund Liability Insurance (Errors & Omissions and Directors & Officers)

When a fund underperforms, investors often look past market conditions for someone to blame. Fund liability insurance combines Errors & Omissions (also known as E&O or Professional Liability Insurance) and Directors & Officers (also known as D&O Insurance) coverage in a single policy. This coverage protects the fund entity and its directors, officers and trustees from legal defense costs,  judgments, settlements arising from professional duties, regulatory investigations, and operational errors. 

Typical claims include investor suits alleging breach of fiduciary duty, misstatements in offering documents, valuation disputes and conflicts of interest.

• Protects the fund and its directors, officers and trustees
• E&O and D&O combined in one policy
• Pays defense costs, settlements and judgments

Call 617.439.9595 to apply

Cyber Security Insurance

Hedge funds and private investment funds move large sums and are liable for capital calls and redemption instructions, compromised email accounts and ransomware attacks on trading systems. Private fund advisers registered with the SEC are subject to the amended Regulation S-P, which requires written incident response programs, oversight of service providers, and notice to affected individuals after certain breaches.

Cyber programs may cover both your own losses and claims brought by others, including:

• Network extortion and ransomware payments
• Social engineering and fraudulent funds transfer (firm’s own funds)
• Data forensics, breach notification and credit monitoring
• Regulatory defense, fines and penalties, where insurable by law
• Business interruption and reputational loss
• Public relations expenses and media liability

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Hedge Fund and Private Fund Fidelity Bonds

A fidelity bond, also commonly referred to as a Crime Policy, is designed to protect against a range of fraudulent exposures. Crime coverage is particularly important because losses resulting from theft, fraud, embezzlement, or fraudulent transfer of funds are generally not covered under standard property, liability or cyber insurance policies. A Crime Policy serves as a critical safeguard by protecting both the institution’s own assets and, where applicable, client funds, entrusted to the institution’s care, custody or control from potentially significant losses arising from both employee dishonesty and external criminal acts. 

Call 617.439.9595 to apply

Employment Practices Liability Insurance

Employment Practices Liability Insurance covers claims by employees, former employees and job applicants concerning discrimination (based on age, sex, race, disability, etc.) wrongful termination, sexual harassment and other employment-related allegations.

Call 617.439.9595 to apply

Pension / ERISA Bonds for Your Firm’s Own Plans

Management companies that sponsor a 401(k), profit sharing or pension plan for its employees are bound by ERISA Section 412 requiring that any individual who handles plan funds be bonded. The bond protects the plan, not the firm, against losses from fraud or dishonesty by the people who manage or handle the assets.

Section 412 of ERISA requires a bond limit of 10% of plan assets, with a minimum of $1,000 and a maximum of $500,000 per plan ($1 million for plans holding employer securities). The plan’s annual Form 5500 asks whether the bond is in place, and a missing bond can draw attention from the Department of Labor.

A pension bond is different from a fidelity bond:  A pension bond pays the plan, while your fidelity bond pays the fund. The insurance company that Liftman works with can typically expedite the issuance of a pension bond. The pension bond includes inflation guard coverage to remain in compliance.

Call 617.439.9595 to apply