Only a few nanoseconds after JPMorgan Chase Bank agreed to pay $88.3 million dollars to the Office of Foreign Assets Control (“OFAC”) to settle charges that the bank violated the agency’s sanctions on Cuba, Iran and other countries, the Louisiana Municipal Employees Retirement System has filed a derivative action seeking to have the bank’s directors repay the $88.3 million fine. The lawsuit apparently focuses on statements by OFAC in its press release which noted that after an internal investigation revealed wire transfers to a Cuban national, “the bank failed to take adequate steps to prevent further transfers.” Because of this, the JPMC directors are alleged to have been complicit in the transfers and to have failed to exercise adequate oversight of the bank.

Now, there’s no need to stay up tonight and lose any sleep worrying that the directors of JPMC will have to reach into their own wallets and cough up any of this money. That’s what director’s and officer’s (“D&O”) insurance coverage is for, and it should pay legal fees and any judgments or settlements unless dishonesty by the directors can be proved. Of course, monetary awards against directors are rare in derivative actions, so the action is likely to be settled, with the settlement amount paid by the company that issued the D&O coverage. Still, this case is a reminder that settlements of export and economic sanctions violations may not end with payment to the agency.

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