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Judge: Level Global Deserves XL Insurance Coverage

A Manhattan federal judge has ordered an insurer to keep advancing legal fees of a hedge fund implicated in a criminal insider trading probe, saying the insurer was not excused because a fund analyst knew there might be a fraud when the policy was taken out.

By Jonathan Stempel (Reuters), Katya Wachtel (Reuters) | Updated on June 14, 2012

(Reuters) – A Manhattan federal judge has ordered an insurer to keep advancing legal fees of a hedge fund implicated in a criminal insider trading probe, saying the insurer was not excused because a fund analyst knew there might be a fraud when the policy was taken out.

Wednesday’s decision by U.S. District Judge Paul Engelmayer is a defeat for XL Specialty Insurance Co, which had sought to rescind its $10 million policy for Level Global Investors LP and recoup more than $7.3 million already advanced, including to co-founder Anthony Chiasson.

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