Marsh indicates that the extradition of the Nat West Three to the US highlights confusion about the extent of directors' and officers' (D&O) cover.
Nick Foord-Kelcey, D&O partner at Marsh, stated that policy wording is not sufficiently clear “in relation to extradition”.
He added: “We are seeing boardroom requests for explicit confirmation of cover for the cost of opposing extradition and obtaining a bail bound.
“It is important to be cautious, to take advice and consider amending or extending the D&O policy to achieve clarity for your directors and officers. Analysis is also important when reviewing any cover provided by a prospectus liability policy, as similar liabilities are covered under such policies and directors could face extraditable offences.”
It is vital for directors to analyse criminal law in countries in which they conduct business.
Sarbanes-Oxley legislation has already changed directors' behaviour, according to Foord-Kelcey.
He said: “The Sarbanes-Oxley legislation was introduced in 2002. In 2003 and 2004 many of the claims related to behaviour prior to Sarbanes-Oxley, so it's only from 2005 that we start to see a real impact on the number of claims being made. There has been a steady fall in the frequency of shareholder class actions in the US from then on.”
