On March 9, 2009, the New York State Supreme Court for New York County dismissed an action brought by hedge fund Millennium Partners, L.P. (Millennium) against Select Insurance Company (Select) for breach of its directors and officers liability policy.  Millennium initially sought to recover defense costs incurred in settling federal and state securities fraud charges.  Select moved for summary judgment dismissing Millennium’s complaint; the court granted summary judgment to Select and dismissed Millennium’s complaint.  The underlying fraud charges resulted in disgorgement of “improperly acquired funds” by Millennium, which did not constitute a “loss” under the Select policy; because the loss itself fell under a policy exclusion, Millennium could not recover the cost of defending against the charges that led up to the loss.  Our discussion of the case offers insight into questions at the heart of hedge fund manager D&O policies: when will insurers challenge claims for coverage, and how will courts respond to such challenges?