Georgetown Capital Group, Inc. v. Everest Natl. Ins. Co. (N.Y. App. Div. 4th, March 15, 2013)
The amended complaints in the underlying federal actions alleged that (1) a former employee of the firm and a registered representative of the broker-dealer advised investors to sell legitimate securities and offered and sold unregistered and fictitious securities to them; and (2) the policyholder firm failed to supervise him. The appellate court found, inter alia, that the firm was a party covered by the policy and sustained a “loss” defined by the policy. The underlying actions alleged that the firm failed to supervise the employee, which was a “Wrongful Act” defined by the policy. Some of the services provided by the employee and set forth in the amended complaints in the underlying actions “potentially” fell within the policy definitions of “Professional Services” and an “Approved Activity.” Those allegations were supported by the federal criminal complaint and the employee’s admissions. Accordingly, the insurer was obligated to provide a defense to the insureds.