SBF has directors and officers coverage through FTX Trading parent Paper Bird, but now that two companies have paid out $10 million, the third in line is balking, the suit claims.As the final preparations for the trial of Sam Bankman-Fried were underway in Manhattan, attorneys for the embattled former FTX CEO were filing a suit against the Continental Casualty insurance company in the District Court of Northern California.
The suit claimed that Continental Casualty is the provider of Paper Bird’s “second-layer excess policy in the D&O insurance tower.” D&O insurance protects the directors and officers of a company from personal losses in the event of a suit against them. Such coverage can be organized into a metaphorical tower of policies, where a policy on a given layer comes into force when the policy below it reaches its limit.
According to the suit, the primary layer of D&O coverage provided $10 million for Bankman-Fried's defense from two insurers, and Continental Casualty’s policy was intended to provide $5 million. The policy mandated that payments be made on a current basis. It covered the cost of defense against criminal charges, even though there was an exclusion for “fraudulent, criminal, and similar acts.” There was no clawback provision in the policy.
Twenty individuals were named in the Hiscox complaint. They were all described as having connections to FTX, sometimes by title . According to The Financial Times, Paper Bird was the full owner of FTX Ventures and owned 89% of FTX Trading. The newspaperpayments under a policy issued to West Realm Shires, which is more commonly referred to as FTX US. That effort