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D&O Disarray

August 4, 2014
Gregory J. May

In W. Holding Company Inc. v. AIG Insurance Company - Puerto Rico, the U.S. Court of Appeals for the First Circuit Ruled on the applicability of a Directors and Officers liability policy's "insured vs. insured" exclusion to an action brought by the Federal Deposit Insurance Corp. against a failed institution's directors and officers. 

It's an issue that has resulted in a wide variety of rulings at the federal district court level over the years. 

Westernbank, which was once one of Puerto Rico's largest banks, failed in 2010, and the FDIC was named receiver. The FDIC initiated an action against Westernbank's directors and officers seeking recovery of more than $367 million allegedly lost as a result of certain breaches of fiduciary duty. 

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