The dispute between Bear Stearns and its insurers over coverage for $140 million in disgorgement paid in connection with an SEC settlement has wound its way up and down the New York state courts, with the trial court at least twice ruling in Bear Stearns’ favor and the First Department twice reversing in favor of the defendant insurers.
In November (over a decade after Bear Stearns merged into J.P. Morgan), the Court of Appeals weighed in for the second time and again reversed in favor of Bear Stearns, rejecting the First Department’s view that disgorgement by definition constitutes an uninsurable penalty. J.P. Morgan Securities v. Vigilant Insurance Company, et al., 2021 WL 5492781 (Nov. 23, 2021).
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