Spending $1 million of his employer’s money on legal fees to fight a $70,000 insider-trading penalty may have been easy for Robert D. Happ, but having to pay the million back to his former company because of a court ruling will be more painful.

Happ’s expensive lesson is more than a cautionary tale. It is now a helpful precedent in the 1st U.S. Circuit Court of Appeals for companies that dole out indemnification protection for officers and directors but can’t get off the hook even if the executives’ conduct is shady.

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