Directors & Officers Liability

≡ A loan officer indicates to a borrower that the bank will fund the borrower’s loan request. The borrower relies on this commitment (and the loan officer’s apparent authority to make the commitment) and plans his business accordingly. The loan is subsequently not approved, leaving the borrower with no resources to take advantage of business opportunities that were based on the funding commitment. The borrower sues the loan officer who made the funding commitment.
   
≡ A shareholder derivative action is brought against a bank’s board of directors alleging mismanagement as the directors failed to properly diversify the bank’s investment portfolio by making substantial investments in collateralized debt obligations (CDOs). The shareholders seek to recover the value of the investment losses sustained by the bank. While the dollar amount of investment losses is not covered, defense costs incurred to defend the directors are covered.