Former insurers of securities class action firm Milberg waited too long to rescind coverage and sue for repayment of money spent defending the firm in a kickback probe, a Manhattan federal judge has ruled, holding that the carriers knew the law firm was under indictment yet failed to act.

“The law does not protect the plaintiff who turns a blind eye to such information,” Southern District Judge Loretta A. Preska wrote in Certain Underwriters at Lloyd’s v. Milberg, 08-civ-7522, ruling the carriers’ rescission claims were untimely under New York’s six-year statute of limitations.

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