N.Y. High Court Revives Coverage Battle Over $140M Bear Stearns Settlement

NEW YORK — New York’s highest court has reinstated an action in which J.P. Morgan Securities Inc. is seeking coverage for a $140 million disgorgement payment by its predecessor, Bear Stearns, as part of a settlement with the Securities and Exchange Commission, ruling it did not constitute a “penalty imposed by law” for coverage purposes.

In a Nov. 23 opinion, the New York Court of Appeals majority found the $140 million payment was compensatory, and therefore insurable.

In 2003, the Securities and Exchange Commission and other regulatory agencies began investigating securities broker-dealers Bear, Stearns & Co. Inc. and …