The Latest Banker to be Extradited

On January 14th 2013 the Westminster Magistrates Court gave the green light to the US authorities for the extradition of former Credit Suisse Trader Kareem Serageldin to the United States where he will face charges linked to allegations that he inflated the prices of subprime mortgage backed bonds in 2007/2008.

Serageldin is the latest in an increasingly long list of individuals working in the UK’s financial services sector who have faced the prospect of extradition.  Interestingly, two of Serageldin’s former colleagues at Credit Suisse have already pleaded guilty in a US Court last year to charges of conspiracy to commit wire fraud and falsify books of record.

From the reports of the proceedings at the Westminster Magistrates Court which I have seen, it does not appear that Mr Serageldin has opposed the application for his extradition to the US.  This is despite (or possibly because) at least one of the counts which he faces carries a maximum penalty of 20 years in jail. 

There is press speculation that Serageldin’s lawyers are in negotiations with the US Department of Justice over a possible plea bargain.  We may know more in the next 2 months during which time the Home Secretary, to whom the case has now been referred, will indicate whether the request by the US authorities will be acceded to.

Fight or Flight

The question as to whether to fight extradition or try to plea bargain is never straightforward. The answer will depend on the facts, the appetite for risk and perhaps to some extent the funding available to the accused in any particular case.  One specific potential stumbling block in this process which is sometimes missed is the question of D&O insurance response. 

Assuming an individual has the benefit of this insurance cover and that extradition is (as is usually the case) indeed covered, the trap for the unwary lies in the risk that in entering into a plea bargain the accused unwittingly compromises his or her coverage position.

A “formal admission” of criminal conduct might trigger one or more exclusions in the policy and might conceivably also trigger claw back provisions under which the insurers may be entitled to claim back costs advanced to the accused up to the point of admission. As always it can pay dividends to read and understand  the policy terms up front.

About Francis Kean

Francis is an Executive Director in Willis Towers Watson's FINEX Global, where he specializes in insurance for Dir…
Categories: Directors & Officers

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