Hallmark Financial Services, Inc. Class Action Lawsuit
- Company Name
- Hallmark Financial Services, Inc.
- Stock Symbol
- Class Period
- March 5, 2019 to March 17, 2020
- Northern District of Texas
The Hallmark Financial Services, Inc. class action lawsuit charges Hallmark Financial and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Hallmark Financial securities between March 5, 2019 and March 17, 2020 (the “Class Period”). The Hallmark Financial class action lawsuit was commenced on May 5, 2020 in the Northern District of Texas and is captioned Schulze v. Hallmark Financial Services, Inc., No. 20-cv-01130.
Hallmark Financial is a diversified property/casualty insurance group.
The Hallmark Financial class action lawsuit alleges that throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Hallmark Financial lacked effective internal controls over accounting and financial reporting related to reserves for unpaid losses; (2) Hallmark Financial had improperly accounted for reserves for unpaid losses and loss adjustment expenses related to its Binding Primary Commercial Auto business; (3) as a result, Hallmark Financial would be forced to report a $63.8 million loss development for prior underwriting years and would exit from its Binding Primary Commercial Auto business; and (4) as a result of the foregoing, defendants’ positive statements about Hallmark Financial’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On March 2, 2020, Hallmark Financial announced it had decided to exit from its Binding Primary Commercial Auto business and reported a $63.8 million loss development for prior underwriting years. On this news, Hallmark Financial’s share price fell more than 14%. Then, on March 11, 2020, Hallmark Financial disclosed that it had dismissed its independent auditor, BDO USA, LLP (“BDO”), due to a disagreement regarding estimates for reserves for unpaid losses, among other things. On this news, Hallmark Financial’s share price fell by nearly 30%. Finally, on March 17, 2020, Hallmark Financial filed with the U.S. Securities and Exchange Commission a letter from BDO in which BDO stated that it had “expanded significantly the scope of its audit on January 31, 2020, with respect to which a substantial portion of the requests had not been received and/or tested prior to our termination.” On this news, Hallmark Financial’s share price fell an additional 2.5%.
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