Rumours that can destroy the stock price of banks and investment banks have been the focus of the media and have now attracted the attention of regulators. But what about rumours that cast doubt on the solvency of insurance companies that are equally important to the New York economy and global capital markets? All financial services companies – banks, investment banks and insurance companies – rely on market confidence. Just as a depository institution’s continued existence depends on the confidence of depositors, so an insurance company’s existence depends on the confidence of policyholders.

This is why New York State enacted a law in the 1930’s providing for civil and criminal sanctions for spreading false rumours or making statements “untrue in fact” about an insurance company’s solvency.