Facts

An elderly woman was trying to get Medicare benefits for her husband. A financial planner, the insured, recommended that the woman sell her securities and purchase real estate, and then re-invest the real estate after she was approved for Medicare. The woman did as advised, but the four properties she purchased for about $250,000 were worth only about $25,000. Meanwhile, the insured received "under the table" commissions for the purchase of the properties. The woman sued the insured, resulting in a judgment over $600,000.

The insurer defended and settled the matter on behalf of the first-named insured for the transaction, but denied coverage to the individual insured under an exclusion for "selling away," defined as the selling of a non-registered security that was not approved by the first-named insured. The individual insured then sought to collect against the insurer for the judgment. The matter proceeded to binding arbitration.

Result

The first-named insured testified that the real estate was not on their approved product list, and that the individual insured was terminated for his actions in connection with the underlying case. Based on this evidence, the arbitrator determined that the individual insured was not covered, and that the judgment creditor could not collect against insurer for the judgment.