A recent ruling by New York’s highest court involving an insured broker-dealer’s market timing settlement with the SEC may impact hedge fund managers evaluating SEC settlements requiring disgorgement payments where fund investors, rather than the manager, benefited from manager misconduct.  This article summarizes the factual allegations and legal arguments underpinning the court’s decision in this case.  Managers in such circumstances would also be well-advised to determine whether disgorgement payments would be covered by their directors and officers and errors and omissions insurance policies.  See “Hedge Fund D&O Insurance: Purpose, Structure, Pricing, Covered Claims and Allocation of Premiums Among Funds and Management Entities,” Hedge Fund Law Report, Vol. 4, No. 41 (Nov. 17, 2011).