What worries investment managers:
- Improper trading
- Disputes over fees
- Inappropriate Investments
- Breach of investment guidelines
- Failure to properly disclose risks
- Inappropriate Valuation of Investment securities
- Breach of fiduciary duty trust
- Mutual Fund Asset Protection Insurance policy is tailored to meet the specialized needs of mutual fund professionals like you.
Who is Protected
This policy is specifically designed to address the structure common in the fund management industry, namely
- The Mutual Fund
- The Corporate Trustee
- The Investment Management Company
- The policy offers protection for the firm's critical contributors, including present and future directors, officers and employees of the Corporate Trustee and or lnvestment Manager.
Customized Insurance Protection
It covers activities of fund management firms including
Errors, omissions, misstatements, misleading statements, neglect, breach of duty or breach of trust while performing or falling to perform professional services
Errors, omissions, misstatements, misleading statements, neglect, breach of duty or breach of trust by a trustee, director or officer of the Corporate Trustee or Investment Management Company
Policy Features
The definition of a claim includes civil or criminal proceedings administrative investigations and written demands
- Claims made policy
- Acts of an Insured / knowledge possessed by an Insured will not be imputed to other insured
- Insurance solution for any combination of unit trusts, Trustees. Investment managers and their directors, officers and employees
- Extended reporting period is available
- In the event of acquisition/ change in management control of the Insured, the policy will run till its natural expiry without termination
- Advancement of defense costs prior to final disposition of a claim
- Defense costs are provided within the limit of liability
- Insureds have the right to choose their own legal counsel subject to prior approval
- Worldwide cover
- Spousal liability extension
- Estates and legal representatives of incapacitated or deceased insured individuals are covered
What is excluded
- Pending or prior litigation, demands or judgments
- Claims against the fiduciaries or administrators of any retirement or employee benefit plan for employees
- Investment banking and dealer exclusions
- Defamation, wrongful entry, eviction, false arrest or imprisonment, malicious prosecution, assault or battery
- Claims of deliberate fraud, willful violation of regulations or statutes, illegal profit or advantage are excluded where they are established in fact
- Assumption of the liability of third parties pursuant to contract
- Intentional breach of contract where established at final adjudication
- Claims brought by security holders of trustee or investment manager
- Counterparty insolvency exclusion
Claim examples
EXAMPLE : 1
ABC Company made an error while amortizing its investment by entering the wrong cost of acquisition. The error was observed 30 days later and it resulted in an inflated NAV and hence the AMC, with the specific instructions from the Trustee and approval of an Independent Counsel, had to transfer around US$ 500,000 for rectifying the error to avoid a possible dispute from the investors.
EXAMPLE : 2
ABC Scheme invested US$ 3 Mn in XYZ with a call/put option and a fixed maturity date. Just before the maturity, in investment committee meeting it was decided to transfer this security from scheme ABC to another scheme DEF. Inadvertently, the same was not executed. At the same time, on maturity, call/put option was also not exercised. This was later discovered during periodic checks. ABC tried with XYZ to exercise the option during the next few days with no avail. In view of repercussions and possible disputes with Investors, the Trustees advised the fund to effect the transfer of this scrip as per market rates prevailing on the date of transfer to DEF scheme. This resulted in a loss of US$ 100,000 to ABC scheme investors which was to be made good by ABC scheme Investment manager.