Insuring Disgorgement and Restitution Claims After Liu v. SEC; Liu's Effect on Kokesh, TIAA-CREF, and J.P. Morgan

Recording of a 90-minute CLE webinar with Q&A

Conducted on Wednesday, October 14, 2020

Recorded event now available

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Program Materials

This CLE webinar will discuss whether insurance policies provide defense and indemnity coverage for restitution or disgorgement of "ill-gotten gains." This issue continues to challenge policyholders, insurers, and courts nationwide. The program will analyze the effect of Liu v. SEC, (U.S. June 23, 2020), on insurability, coverage issues, and seminal cases in this area. The panelist will provide practical guidance gleaned from recent seminal decisions and explain the most compelling arguments for and against these claims, ranging from broad public policy considerations to close reading of exclusions.


Whether coverage exists for disgorgement or restitution of purported "ill-gotten gains" under D&O and other professional liability policies has been a pervasive issue in jurisdictions across the country. The increased filings of consumer and securities class actions, breach of fiduciary duty actions, SEC enforcement actions, and appraisal actions have fueled this judicial debate.

The Supreme Court's 2019 decision Kokesh v. SEC held that disgorgement qualifies as a "penalty" for purposes of the applicable statute of limitations and has had far-reaching implications for insurance practitioners. In Liu, the Court decided in the affirmative the issue left unresolved in Kokesh, whether the SEC could even request disgorgement under its authority to seek "equitable relief." Liu holds that it can subject to certain limits.

Although some lower courts have followed Kokesh and found disgorgement and restitution uninsurable, the Delaware Supreme Court held in In re TIAA-CREF Insurance Appeals that settlement of a civil lawsuit involving claims for disgorgement was an insurable loss under New York law. These cases provide valuable guidance on how counsel--and courts--should approach coverage disputes over disgorgement claims.

Listen as Justin F. Lavella, Partner at Blank Rome, provides practical guidance gleaned from the recent seminal decisions and explains the most compelling arguments for and against these claims--ranging from broad public policy considerations to close reading of exclusions.



  1. Overview
  2. Recent cases
  3. Principal issues
  4. Policyholder perspectives
  5. Insurer perspectives
  6. Practical strategies and best practices


The panelist will review these and other relevant issues:

  • When does an insured's loss represent disgorgement of an improper claim?
  • What guidance does In re TIAA-CREF Insurance Appeals provide on approaching coverage disputes?
  • When does an alleged wrongdoer's liability insurance cover an aggrieved party's claim for restitution?
  • What are the fundamental legal principles and considerations applicable to the disgorgement inquiry?
  • How have courts interpreted the public policy exclusion for "uninsurable loss"?
  • When analyzing courts' efforts to determine the prevailing public policy in the context of whether insurance should be allowed to cover claims for restitution, on what basis do courts have the authority to decide public policy?
  • What role does fact-finding play in identifying uninsurable disgorgement?


Lavella, Justin
Justin F. Lavella

Blank Rome

Mr. Lavella is a partner in Blank Rome’s policyholder-only insurance recovery practice, formerly the insurance...  |  Read More

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