- Company Name
- Aflac Incorporated
- Stock Symbol
- Class Period
- February 27, 2013 to January 11, 2018
- Motion Deadline
- April 14, 2018
- Middle District of Georgia
The complaint charges Aflac and certain of its officers with violations of the Securities Exchange Act of 1934. Aflac, servicing more than 50 million people worldwide, offers voluntary insurance policies designed to supplement traditional health insurance and protect individuals from depletion of assets and loss-of-income. Its products include insurance plans for accidents, cancer, critical illness/care, hospital indemnity, fixed-benefit dental, vision care and life and short-term disability.
The complaint alleges that throughout the Class Period, defendants issued materially false and misleading statements and/or failed to disclose adverse information regarding Aflac’s business and operations. Specifically, the complaint alleges that defendants failed to disclose, among other things, that Aflac hired its sales associates under false promises of high compensation packages and work/life balance and misclassified its employees as independent contractors to reduce costs associated with unemployment insurance taxes and employment benefits. In addition, according to the complaint, Aflac manipulated its average weekly producer equivalent metric to fabricate growth and, consequently, violated its own Code of Conduct and corporate social responsibility standards. As a result of defendants’ false statements and/or omissions, the price of Aflac common stock was artificially inflated during the Class Period to as high as $91.69 per share.
Then on January 11, 2018, The Intercept published an article revealing undisclosed lawsuits against Aflac for exploitation of workers, accounting manipulation and insider trading. According to the article, nine former employees have alleged that Aflac “exploited workers, manipulated its accounting, and deceived shareholders and customers.” The allegations in the article were based on “interviews with multiple current and former employees, as well as three previously unreported lawsuits.” The article further stated that the “allegations contained in the lawsuits involve nearly every aspect of Aflac’s business and have already led to a series of investigations by state and federal regulators.” And, while the Company’s “top management and board of directors have known about the claims for over a year, they have not disclosed anything to stockholders in public filings” beyond “generalities about unnamed pending lawsuits that they say they expect will not hurt the company’s bottom line.” The allegations in the lawsuits include “[r]ecruiting thousands of employees with promises of six-figure incomes in the first year, which ultimately less than 2 percent . . . manage to earn,” “[e]ncouraging employees to sell policies to friends and relatives,” [w]idespread misclassification of employees as independent contractors,” “illegally ‘bundling’ policies and issuing others to ineligible customers,” “[w]age theft,” and at least “one charge of sexual harassment.” On this news, the price of Aflac stock declined $6.71 per share, or more than 7%, to close at $84.94 per share on January 12, 2018.