You are a registered representative of a broker-dealer in the business of selling securities. While working for the broker-dealer an arbitration is commenced against you and the broker-dealer for alleged “wrongful acts” committed in the course of your professional services. Calmly confident you think to yourself, “This is why I buy my malpractice insurance.”
During the arbitration, the broker-dealer is unable or unwilling to pay any amount due in the arbitration.
The claim is submitted to the malpractice liability insurance company. The insurance company assumes the defense on your behalf and on behalf of the broker-dealer, subject to“all applicable retentions” under the insurance policy. Professional liability (E&O) or directors and officers liability (D&O) policies usually contain a low or zero retention for claims against individuals which are not paid by the corporate entity. When selling insurance, let’s all make it seem as though we protect the “little guy.”