Bonner v. Point72 Asset Management, 18-cv-01233, U.S. District Court, Southern District of New York. The lawsuit filed earlier this month alleges that Steven Cohen’s Point72 Asset Management firm discriminates against women. For its part, the firm denied the allegations and filed papers to seal the complaint, alleging that the claimant is trying “to harm Point72’s repetitional interests, cause upset among its employees by disclosing their confidential personal information, and perhaps, generate publicity."
This shouldn’t be a shocking claim. In a tumultuous world, hedge funds are among the most vulnerable institutions for claims of wrongful employment violations. The deeper the pockets, the larger the target. A legal suit, whether for sexual harassment, wrongful termination, or discrimination, can bring long-term damage to a fund or financial institution.
With the emerging #MeToo movement, it is important to understand the complex landscape surrounding sexual misconduct and gender discrimination. Some firms believe mandatory arbitration requirements will protect them from significant financial loss. It is important to note that lawmakers, both in Congress and in statehouses across the land, are considering the invalidation of such mandatory employment arbitration clauses. Consider the Ending Forced Arbitration of Sexual Harassment Act, a bipartisan bill making its way through Congress. Legislatures in California, New York, and New Jersey have similar bills pending action.
Portfolio managers, as well as high-level C-suite executives, are highly compensated individuals who have amassed considerable wealth. As such, they remain targets of frivolous lawsuits. Many have opted to specifically insure their organizations to cover the defense costs associated with employment practices claims and the resulting monetary damages stemming from such lawsuits. For funds and financial institutions which are not currently insured, it is wise to investigate Employment Practices Liability (EPLI) coverage which is readily available in the market. For those currently utilizing a Professional Employer Organization (PEO), chances are, you are sharing in a global co-employers EPLI policy. Given that, it is strongly recommended to review the policy terms and conditions of your PEO. Additionally, it is important to consider the potential erosion issues which may arise when sharing in a global joint insured policy.
In either case, whether covered by your existing PEO or separately, one question must be raised: Is your organization’s coverage adequate for your needs? If there are gaps, consider adding an additional policy which can respond “excess of” PEO coverage or, better yet, respond first.
If you have questions, call the specialists at Iron Cove today. They’ll inspect your policies to ensure they carry the essential endorsements necessary to guard against 21st century malfeasance.