No Bad Faith or Fiduciary Duty Breach by Insurer
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No Bad Faith or Fiduciary Duty Breach by Insurer

Clients of an investment advisory company sued as its assignees seeking coverage on a claims-made financial services policy complaining of breach of fiduciary duty and bad faith. Prior to the policy’s inception, the SEC undertook an investigation of the company and later the clients sued alleging the same conduct alleged by the SEC. On appeal of a mixed bag of decisions on cross-motions for summary judgment, the Tenth Circuit, applying Utah law, held there was no coverage because the client’s claims and the SEC investigation alleged a scheme of defrauding investors over a period of several years by means of “related” misconduct, thus invoking the policy’s interrelated wrongful acts provision. The bad-faith and breach of fiduciary duty claims also failed.

Morden v XL Specialty Insurance