Zurich North America has revised its liability policy for investment advisers, mutual fund and hedge fund managers.
Zurich says it has made the changes in response to a rise in regulatory risk fueled by new investigative approaches used by the Securities and Exchange Commission (SEC).
In 2014, the SEC filed a record 755 enforcement actions, obtained orders totaling $4.16 billion in disgorgement and penalties and saw its first infraction of the “pay-to-play” rule for investment advisers.
The SEC also saw increased activity in its whistleblower program—about $35 million in awards were handed out—and leveraged initiatives like the Aberrational Performance Inquiry, which uses data analytics to look for unusual performance return postings from hedge fund advisers.
“Our customers are vulnerable to increased regulatory scrutiny by the SEC and its use of improved investigative tactics,” said Marc Tauber, vice president of National Accounts Financial Services for Zurich North America.
Zurich Asset Management Select (ZAMS) is a broad policy for advisers and hedge fund managers to help address the increased litigation exposure from investors and limited partners, as well as increased regulatory risk.
ZAMS includes coverage for derivative demand investigation costs, a coverage that Zurich said is typically available only through endorsement.
Other coverage highlights of ZAMS include: inquiry costs coverage; non-party witness coverage; alternative investment fund managers directive; outside directorship liability; and insured-person-specific coverages such as freedom protection costs, assets and liberty costs and pre-insolvency hearing costs.
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