For better or for worse (better for lawyers; worse for companies), investigations into securities law issues at publicly traded companies tend to be very expensive. Internal investigations and a company's response to enforcement authorities such as the SEC or DOJ are high-stakes endeavors that require skilled and typically well-compensated counsel.

Historically, Richard Levick writes on his Communicators Blog, companies' legal expenses in dealing with such internal investigations have not been covered under primary D&O policies, and have been deemed to be "uninsurable costs of doing business." But now, Levick says, the impact of Dodd-Frank may be changing this.

Among other things, Dodd-Frank includes major incentives for whistleblowers who provide the SEC with tips that lead to successful enforcement actions--up to 30% of the penalties imposed, which can reach into the hundreds of millions of dollars in large cases. This incentive has already led to an increase in the number and quality of tips received by the SEC. Paul Ferrillo of Weil, Gotshal & Manges tells Levick that it appears as if the "profoundly altered regulatory environment" after Dodd-Frank is driving the D&O insurance market to sell new kinds of coverage, such as for internal investigations.

One new product now being rolled out by Chartis claims to help companies manage the risk of being the target of a costly multi-front securities investigation. Chartis says that this product is the "first insurance policy designed specifically to address the costs of companies with public securities in responding to investigation," covering expenses such as legal fees and costs incurred in responding to securities law investigations commenced by enforcement authorities or internal investigations triggered by self-reporting.