Hunton Insurance Recovery Blog

In a March 17, 2017 opinion, a Minnesota federal court rejected a financial institution bond carrier’s attempt to rescind the bond it issued to a credit union despite the credit union’s manager making a false statement in the bond application that she had no knowledge of any act which might give rise to a claim, after she had embezzled $3 million. See National Credit Union Administration Board v. CUMIS Insurance Society, Inc., No. 16-139, 2017 WL 1047256 (D. Minn. Mar. 17, 2017).  The court refused to attribute the embezzler’s misrepresentation to her employer because, in embezzling the credit union’s money, she was working solely for her own benefit.

As first reported yesterday by Michael Levine, Tesco Bank (owned by Britain’s biggest retailer) stopped online transactions on Monday after hackers stole money from 9,000 accounts. Tesco Bank has begun refunds, the total cost of which will exceed $3 million. Experts estimate that the biggest hit to the bank will come in the form of reputational damage.

On May 20, the Eight Circuit held that the State Bank of Bellingham was covered for losses following the criminal third party wire transfer of $485,000 from the bank to a foreign account. The money was stolen by hackers in 2011 after a bank employee inadvertently left one of three security measures disabled and computers running overnight.