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    NY Federal Court Finds Coverage for Policyholder Duped By Computer Fraudster

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    A policyholder was hit by a fraudster that developed emails mirroring the format of the company’s emails and showing knowledge of sensitive company details. Because of the ersatz emails, company employees were tricked into arranging a $4.8 million wire transfer to the perpetrator’s account. The federal district court for the Southern District of New York found coverage for the policyholder. The judge distinguished other recent decisions, finding “coverage [under the computer fraud coverage section] fraud where the perpetrator violates the integrity of a computer system through unauthorized access ….” According to the opinion, the funds transfer coverage section also applies because the thief impersonated an authorized representative and prompted company personnel to effect the wire transfer. Medidata Solutions Inc. v. Federal Ins. Co., No. 15-cv-907 (S.D.N.Y., July 21, 2017).

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