An Everest Re Group Ltd. unit does not have to defend or indemnify a stockbroker in connection with charges she conspired as part of an alleged multimillion-dollar Ponzi scheme, a federal district court has ruled.
Everest Re entity Everest National Insurance Co. filed suit in US District Court in Chicago seeking a declaratory judgment. It did not have to defend or indemnify Cynthia Komarek under two securities broker/dealer policies it had issued to Royal Alliance Associates Inc., which is not a party to the suit, according to Tuesday’s ruling in Everest National Insurance Co. v. Cynthia Komarek, et al.
Komarek was previously a registered representative of a Royal Alliance entity, SagePoint Financial Inc.
Mrs. Komarek was one of the defendants in two lawsuits filed in Illinois state court alleging that she had participated in the Ponzi scheme while running a separate entity from SagePoint.
The District Court granted Everest summary judgment in Tuesday̵
7;s ruling. “Plaintiffs’ claims are not based on allegations that Komarek engaged in conduct … performed in connection with the purchase or sale of a product endorsed by and offered for sale through SagePoint,” the ruling said.“Thus, Everest has no duty to defend Komarek in connection with the underlying lawsuits,” and therefore has no duty to indemnify her, the ruling said.
Attorneys in the case did not respond to requests for comment.
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