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AmTrust Financial Services, Inc. Class Action Lawsuit

11 days left to seek lead plaintiff status

Case Summary

Company Name
AmTrust Financial Services, Inc.
Class Period
January 22, 2018 to January 18, 2019
Motion Deadline
October 29, 2019
Court
Southern District of New York

On August 28, 2019, the AmTrust Financial Services, Inc. class action lawsuit was filed charging AmTrust and certain of its officers with violations of the Securities Exchange Act of 1934. The AmTrust class action lawsuit was commenced in the Southern District of New York on behalf of purchasers of AmTrust’s six series of preferred stock and depositary shares between January 22, 2018 and January 18, 2019 and is captioned Martínek v. AmTrust Financial Services, Inc., No. 1:19-cv-08030.

AmTrust is an insurance holding company.  Through its subsidiaries, AmTrust provides specialty property and casualty insurance products in 50 states, the District of Columbia, and Puerto Rico.  In November 2018, the defendants and their family members and affiliates took AmTrust private, acquiring the 45% of AmTrust’s minority-owned common stock they did not already own for $14.75 per share (the “Merger”).

In addition to AmTrust common stock, between 2013 and 2016, AmTrust issued six different series of preferred stock and depositary shares (the “preferred shares”), raising almost $1 billion from the public.

As the AmTrust class action lawsuit alleges, during the Class Period, defendants repeatedly assured investors in the preferred shares that the shares would continue to be listed and trade on the New York Stock Exchange (“NYSE”) after the Merger.

Then on January 18, 2019, less than two months after the close of the Merger, AmTrust announced the delisting of all six series of the preferred shares.  According to AmTrust’s announcement, “AmTrust’s decision to delist and deregister the [preferred shares] was based on its determination that the administrative costs and burdens associated with maintaining the listing on the New York Stock Exchange (“NYSE”) and the registration exceed the benefits given the small number of record holders and the low daily trading volume.”  The AmTrust class action lawsuit alleges that these “administrative costs and burdens” were known or knowable at the time defendants made their public statements regarding the listing of the preferred shares, and thus, defendants’ public statements assuring investors that the preferred shares would remain listed on the NYSE after the Merger were false and misleading when made.

The next trading day following the delisting announcement, the prices of all six series of preferred shares dropped by almost 40% in a single day, a market loss of over $300 million.  Not only was the price decline sharp and immediate after the delisting was announced, the delisting eliminated the financial reporting protections afforded by the listing under the Securities Exchange Act of 1934.  Thus, preferred shareholders would no longer receive information about AmTrust and its financial condition, undermining the trading market for the preferred shares.

In addition, AmTrust had been under intense scrutiny for several years with respect to its accounting methods and business practices by several governmental and regulatory agencies, and after the delisting, AmTrust would no longer be subject to public disclosure requirements, thwarting the investigations into its misconduct.  As Barron’s reported, the delisting was a “seeming reversal of promises that AmTrust managers made to the [SEC] and state insurance regulators.”

The Private Securities Litigation Reform Act of 1995 permits any investor who purchased AmTrust’s six series of preferred stock and depositary shares between January 22, 2018 and January 18, 2019 to seek appointment as lead plaintiff in the AmTrust class action lawsuit.  A lead plaintiff will act on behalf of all other class members in directing the AmTrust class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the AmTrust class action lawsuit.  An investor’s ability to share in any potential future recovery of the AmTrust class action lawsuit is not dependent upon serving as lead plaintiff.  If you wish to serve as lead plaintiff of the AmTrust class action lawsuit or have questions concerning your rights regarding the AmTrust class action lawsuit, please provide your information here or contact counsel, Brian E. Cochran of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at bcochran@rgrdlaw.com.  Lead plaintiff motions for the AmTrust class action lawsuit must be filed with the court no later than October 29, 2019.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For six consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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