Hallmark Financial Services, Inc. Class Action Lawsuit

Case Summary

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%.

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 seven 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.

Class Period: March 5, 2019 - March 17, 2020
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