AIG Specialty Insurance Company recently filed a motion to dismiss a lawsuit filed by investment software manager SS&C Technologies Holding, Inc. seeking coverage for a $6 million loss based on email spoofing. The lawsuit stems from a March 2016 incident when SS&C received spoofed emails that appeared to be from SS&C’s client Tillage Commodities Fund LLC. Believing the emails were legitimate, SS&C authorized transfers of $5.9 million dollars to bank accounts controlled by the hackers in Hong Kong.
In the fall of 2016, Tillage sued SS&C to recover the transferred funds. SS&C had a “Risk Protector Policy” with AIG that included coverage for losses resulting from SS&C’s negligence, errors and omissions relating to the performance of its professional services. AIG paid SS&C’s defense costs for the Tillage lawsuit. After SS&C and Tillage entered into a confidential settlement, SS&G filed the pending lawsuit against AIG.
AIG’s motion to dismiss is arguing that the policy doesn’t cover the transferred funds as they were “arising out of, based upon or attributable to a dishonest, fraud, criminal or malicious act, error or omission” which is specifically excluded under the policy. The court has yet to rule on AIG’s motion.
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