The term “Wrongful Act” shall mean any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the Assureds or any of the foregoing so alleged by any claimant or any matter claimed against them solely by reason of their being such Directors or Officers of the Company.

Lloyd's-Sturge Syndicate Form, ALS (D5) 1st February, 1967 (amended 1st September, 1967)

The above definition includes two key elements: (1) the definition uses the term any when referring to the various wrongful acts and includes any “other act” as well; and (2) the definition includes matters claimed against insureds solely by reason of their status as directors or officers of the corporation. This wording extends coverage beyond the listed wrongful acts to include almost any act or omission, or any matter claimed against the directors or officers solely by reason of their status as such.

An example of a status-type claim would be a director or officer charged with violating federal securities laws dealing with Section 10(b) of the Securities Exchange Act of 1934. This law requires a corporation's directors or officers to disclose material inside information when personally trading in the corporation's own stock. It is often difficult to establish liability in such cases without correlating the executive's status as a director or officer to his knowledge of inside information. Since personal trading in the corporation's stock is outside the individual's capacity as a director or officer, a definition without reference to status might preclude such a claim from being considered.

Today, this type of broad wording often is replaced with language similar to the definition of wrongful act, first introduced in the 1988 London Market policy form shown below.

“Wrongful Act” shall mean any actual or alleged negligent act, error, omission, misstatement, misleading statement, neglect or breach of duty by the Director or Officers, individually or collectively, in the discharge of their duties solely in their capacity as Directors or Officers of the Company.

London Market, L(88)RL

Notice that the reference to any act has been replaced with any negligent act. This change is significant in that the adjective negligent may be interpreted by the insurer to preclude claims for intentional acts. Because many of an executive's duties require intentional acts, the use by some insurers of the word negligent in manner may be quite restrictive. It also could be argued that the language is ambiguous. For example, does use of the term negligent modify all of the listed wrongful acts or does it only apply to the word act? Whether the term negligent is intended by the insurer to be an adjective of the word act only, or whether it is intended to modify all of the listed wrongful acts, the above definition is considerably more restrictive than definitions that do not use the adjective negligent.

The reference to any other matters claimed against the directors and officers because of their status as such also has changed over the years. Notice that in the Sturge Syndicate wording above, the definition of wrongful act refers to a list of events that constitutes wrongful acts, and then goes on to include “any matter claimed against them solely by reason of their being such directors and officers of the company.” Use of the word or in this clause implies that the language that follows is in addition to—and is over and above—the definition as expressed up to that point. The 1988 London Market example above changes the clause by making the various wrongful acts subject to the additional requirement that the wrongful act be “…in the discharge of their duties solely in their capacity as Directors or Officers of the Company…,” while eliminating reference to matters claimed by reason of their being directors or officers of the company. This change in the definition appears to be a restriction in coverage.

In addition to the 1988 London Market example, which incorporates the “negligent” limitation within the definition of wrongful act, the following examples illustrate the variety of language adopted by underwriters over the years in defining this important term. Many insurers continue to provide relatively broad definitions.