Someone posted to me in private and asked my professional opinion as to applicable insurance for this situation. Here is my response:
My professional opinion is that there very likely IS coverage that could offer the shareholders some form of recovery from the Dan Fisher situation. This coverage would be referred to as Professional Liability, and there are two basic types of coverage.
Arcon Energy MAY have carried what is referred to as Directors & Officers Liability, or more commonly referred to as D & O. This would cover damages for which the insured is legally liabile, caused by the actions or failure to act of its officers and directors. Now, considering the sloppy nature of all the paperwork at Arcon, whether or not they purchased the insurance is unknown. This would involve the finding of legal liability in a court of law.
It would seem that at least joint liability would lie with the transfer agent. The type of coverage that would apply in this situation would be Errors and Omissions Coverage, or as it is more commonly known, E & O. In my opinion, the most likely one to carry this coverage would be the Transfer Agent, who allowed this fraud to go thru in the first place. I would have to research the law regarding requirement of this coverage by the SEC or any other entity, but it would certainly be logical that it would be required for transfer agents. There is a large liability exposure created here, and I cannot imagine a clearinghouse of any nature not being covered for the acts of employees or representatives.
It also would not be a bad idea to look for any Fidelity Bonds that may have been required for any individuals involved, for they cover criminal acts.
An insurance claim would not be a bad idea for the shareholders to persue, not necessarily because of the settlement, (which would likely be limited), but because the insurance company would assume the right (and the expense) to legally fight Fisher. I would much rather watch Fisher go down on the Insurance Company's money than that of the shareholders.
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