Hunton Andrews Kurth Adviser Geoffrey Fehling was quoted on June 4 in a Law360 article entitled "FCPA's High Costs Can Cause Tightening in the D&O Market." The article analyzed increased FCPA risks for corporate policyholders, which could lead to an even tougher market for insurance coverage for board members and executives, according to Fehling and other legal experts interviewed for the article. With reference to recent government-led investigations into FCPA infringements, the article discussed, among other things, three important expenses that large corporate policyholders must consider when investigating an FCPA infringement: costs of investigating the alleged infringement, costs of any liability for a supported infringement of evidence and costs to shareholders for potential securities or other subsequent disputes.
Investigation costs, according to Fehling, can be as much as costs associated with subsequent disputes based on the allegations in extensive FCPA investigations. This is because internal investigations often force companies to send lawyers, accountants, experts and consultants globally to resolve the matter. Fehling explained: "The costs in the front can be significant, and many times if there is coverage for pre-claim and investigation costs, these coverage can be limited and not an open contribution."
D&O coverage for FCPA claims is available but varies greatly depending on both the requirements specification and the insurance contracts' insurance contracts, definitions, exceptions and other restrictions that may apply to FCPA exposures. Retaining experienced coverage advice to evaluate relevant D&O policy language and costs of purchasing FCPA-specific coverage is critical to maximizing potential recovery in the event of an investigation, enforcement action, or subsequent litigation.