Mitchell Sandham Launches New Website!

February 1, 2012

Mitchell Sandham is excited to announce the launch of our new website!  Click here to visit.  The product is the result of several months of hard work by our team in analyzing, designing and writing the content for the new pages.  The new site offers significantly more detailed information regarding the suite of services and products that we offer.  In addition to the site’s informative content, the design is developed in a way to provide an efficient user experience.  Our goal is to provide visitors with the most accurate and current product information while demonstrating our knowledge and expertise in the field of insurance and risk management.

***To our current Blog followers:  We will not be using WordPress as our Blog platform going forward.  Our new website now incorporates our Blog within it.  In order to continue receiving our posts please visit the Blog section of our site and subscribe to the RSS feed, here.

Bribery, Whistleblowing and D&O Insurance

May 6, 2010

Bribery continues to be a fairly quiet issue in Canada, but it is really heating up in the US and Internationally. In the US, enforcement of the Foreign Corrupt Practices Act (FCPA) has been used to bring or resolve 36 cases in the first quarter of 2010, up from 6 and 4 in the first quarters of 2009 and 2008, respectively, according to international law firm Willkie Farr & Gallagher LLP. The report and significant review of FCPA cases can be found at The D&O Diary, here.

Is bribery a brand new phenomenon, or the creation of a 20th century diabolical genius?  No, I would suggest it is as old as time, and practiced regularly throughout the world. However, motivation for whistleblowing could make the FCPA a front-running piece of legislation. The draft bill of the Restoring Financial Stability Act of 2010, (a very detailed review can be found on, here), in a small section called Improving Investor Protection at the SEC, includes a proposal to offer “internal whistleblowers a financial reward of up to 30% of any funds recovered.”  Which in the SEC v. Siemens case, here, that could mean $480 million to a ‘good Samaritan’.  

 The US DOJ is good enough to provide a laypersons guide to the legislation, here, and the relationship with Canada is the broad language of “Who” (is the subject of enforcement) including, “any individual, firm, officer, director, employee, or agent of a firm and any stockholder acting on behalf of a firm” and whether the “violator is an “issuer,” a “domestic concern,” or a foreign national or business.” A fairly easy test for many Canadian companies and individuals to pass. I won’t provide more details, at the fear of it suggesting that Canadian entities can avoid this legislation.

In the UK, the Bribery Act 2010, here, received Royal Assent on April 8, 2010, but I see not provision for whistleblower rewards.

The Canadian version of the legislation is called the Corruption of Foreign Public Officials Act (CFPOA), here, but I could not find any provision for rewarding whistleblowers, and even the Foreign Affairs and International Trade Canada, here, site suggests there has been only  one prosecution (2002) under the Act in its ten year history. However, there is one case of a Calgary energy company that acknowledged (Jan 2009) that it was being investigated by the RCMP for alleged improper payments to public officials in South Asia, here.   McMillan LLP, suggests, here, that this legislation should not be dismissed, in part, because “a corporation will meet the mens rea requirement where a senior officer or director “intentionally or recklessly, with knowledge of the facts constituting the offence, or with willful blindness to them “permits the offence to occur.” Though this legislation is not likely to keep most D’s and O’s up at night, there is a very real concern of the close US ties in our business activities, an in the significant loss that can occur from follow-on D&O claims. Therefore, I agree with McMillan that compliance with the legislation is important, and it should be a risk management priority because of the reputation damage and D&O defence costs that can result from an alleged violation. In the Calgary energy company case, the announcement of the alleged corruption corresponded with a relatively short term dip in the company stock price and a five year low in that stock. Luckily there were no follow-on claims.

The insurance implications: fines and penalties, from a CFPOA action, are usually excluded from D&O policies, but depending on the wording, there may be some coverage for defence costs. The real exposure comes from follow-on class action securities claims or derivative actions, which could mean significant payout from the D&O policy. The biggest concern is limits management, limits exhaustion and sharing of limits, because entity coverage for securities claims is the most likely case for the ‘entity’ exhausting limits that would otherwise be available to individual directors and officers. A big cheque from the insurance company may be good, if you maintain a $100 million limit, and the total loss is $25 million, but if your limit is $10 million, and the total loss is $25 million, your directors and officers might be very disappointed with ‘broad’ coverage. The Calgary company lost over half its value in a few short months, and if a claim had been brought and settled, even at a very low “plaintiff-style” damage factor, most Canadian public company D&O policies would have been fully exhausted.

If you would like to discuss any of these issues, please call me directly.

Greg Shields, Partner, Mitchell Sandham Insurance Brokers, 416 862-5626,

CAUTION: The information contained in the Mitchell Sandham website or blog does not constitute a legal opinion or insurance advice and must not be construed as such. It is important to always consult a truly ‘independent’ registered insurance broker and a lawyer who is a member of the Bar or Law Society of the relevant jurisdiction with regard to this material before making any insurance or legal decision. All material is copyrighted by Mitchell Sandham Inc. and may not be reproduced in any form for commercial purposes without the express written consent of Mitchell Sandham Inc. Anyone seeking to link this site from any external website must seek the consent of Mitchell Sandham Inc. by sending an e-mail to

Errors & Omissions Insurance for Graphic Designers

December 24, 2009

The Increasing Importance of This Coverage

Do you think your commercial general liability (CGL) insurance policy will protect you from lawsuits alleging the failure of your product to perform or your failure to provide services to specifications…if so, you better think again. A general liability policy does not protect you from these exposures and as a result, you may have a gap in your liability insurance protection. This is why Errors & Omissions insurance, also known as Professional Liability and E&O for short, should be an integral part of a Graphic Designers liability insurance program.

Graphic Designers have two areas of exposure. The first is a media exposure from the designing and branding of a company’s name and logo. These services give way to potential copyright and patent infringement claims. The second is a technology exposure from the designing and implementation of a web site.

The failure of many graphic designers to obtain E&O insurance reflects both a misunderstanding of the scope of protection offered and a “won’t happen to me” attitude concerning the potential risk of being sued. This insurance not only provides coverage for any damages that may be awarded but it also covers the defense costs associated with the claim.

Errors & Omissions liability claims alleging the failure to render professional services against graphic design firms are escalating. E&O liability provides coverage for claims with or without merit.

The good news is that protection is available and the cost of this insurance is becoming more affordable. There are now packages available for companies that offer a multitude of media services. Don’t let your company go without this coverage.

Ryan Mitchell is a professional insurance broker who specializes in servicing the graphic design industry.

Commercial Insurance

November 26, 2009

Mitchell Sandham is a full service independent insurance broker in Toronto.  Welcome to our new blog!  We will be posting informative articles, postings and preventative tips for our clients and prospects to read.