blanket fidelity bond

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Blanket fidelity bond

SEC-required insurance coverage that brokerage firms are required to have in order to cover fraudulent trading by employees.

Blanket Fidelity Bond

A bond or insurance policy covering a company in the event it loses money as the result of employee theft or fraud. It is important to note that blanket fidelity bonds generally only cover situations in which an employee commits fraud for personal gain; it does not cover situations in which the employee, without support or knowledge of management, falsifies trading so that it makes the company appear healthier than it is. The Federal Bonding Program, run by the Department of Labor, insures or guarantees the insurance of ex-offenders whose employment adds significant risk of theft or fraud. The SEC requires brokerages to be covered by a blanket fidelity bond. See also: Bonding, Operational Risk.

blanket fidelity bond

A type of insurance that protects against losses from employee actions such as forgery or unauthorized trading. Also called blanket bond, fidelity bond.
References in periodicals archive ?
The Surety Association of America, which underwrites "blanket fidelity bonds" -- insurance policies that provide coverage against losses due to employee dishonesty -- found that insurers like AIG, Pruduential and Travelers paid out $385 million in losses in 1998 on $674 million in premiums underwritten -- a high loss ratio of 57 percent.
In addition, blanket fidelity bonds, coverage for electronic data processing (EDP) exposures and utility service interruption are now commonplace among pools.