Law Offices of Howard G. Smith, Representing Investors of CRM Holdings, Ltd., Announces Class Action Lawsuit
26 Febrero 2010 - 7:23PM
Business Wire
Law Offices of Howard G. Smith, representing investors of CRM
Holdings, Ltd. (“CRM Holdings” or the “Company”) (NASDAQ:CRMH), has
filed a class action lawsuit in United States District Court on
behalf of a class (the “Class”) consisting of all persons or
entities who purchased CRM Holdings securities between December 21,
2005 and November 5, 2008, inclusive (the “Class Period”). The
class action lawsuit was filed in the United States District Court
for the Southern District of New York.
The Complaint charges CRM Holdings and certain of the Company’s
executive officers and directors with violations of federal
securities laws. CRM Holdings is a provider of workers'
compensation insurance products. The Complaint alleges that
throughout the Class Period defendants knew or recklessly
disregarded and failed to disclose or indicate the following: (1)
that defendants and their affiliates engaged in a fraudulent scheme
and course of business to grow membership in eight self-insured
groups (the “Trusts”) previously administered by CRM, by charging
premiums below commercial rates; (2) that the membership growth
inflated gross trust revenues while reducing net paid premium
income to the level that the assets of the Trusts would become
insufficient to cover liabilities; (3) that, accordingly, the
Trusts would fall below “fully funded” status; (4) that, as part of
their fraudulent scheme and course of business to cover up the
difference between assets and liabilities, defendants and their
affiliates disguised the true financial conditions of the Trusts by
engaging in certain improprieties designed to result in minimal
projected claims liability, including under-reserving individual
claims and utilizing improper actuarial/accounting methods; (5)
that defendants and their affiliates provided the New York State
Workers’ Compensation Board (WCB) with materially false and/or
misleading financial and actuarial reports for the Trusts which
reflected artificially reduced liabilities; (6) that, as a result
of the above, the Company was exposed to hundreds of millions of
dollars in liabilities relating to the under-funding of the Trusts;
(7) that the Company lacked adequate internal and financial
controls; and (8) that, as a result of the above, the Company's
financial statements were materially false and misleading at all
relevant times.
On October 3, 2008, CRM Holdings disclosed that it had received
a letter from the WCB indicating its intention to initiate legal
proceedings against the Company on behalf of the Trusts related to
CRM Holdings' actions while acting as the administrator and broker
of record for the Trusts. On this news, over the next two days of
trading, shares of CRM Holdings declined $0.61 per share, or
24.31%, to close on October 7, 2008 at $1.91 per share.
Then, on November 5, 2008, CRM Holdings reported its financial
results for the 2008 fiscal third quarter and announced that during
third quarter the Company had approximately $2.5 million of loss
reserve increases that would have otherwise been reflected in the
first and second quarter of 2008.
As a result of this news, over the following three days of
trading, CRM Holdings shares declined $0.58 per share, or more than
36%, to close on November 7, 2008, at $1.03 per share, on high
volume.
No class has yet been certified in the above action. Until a
class is certified, you are not represented by counsel unless you
retain one. If you purchased CRM Holdings securities between
December 21, 2005 and November 5, 2008, you have certain rights,
and have until April 6, 2010, to move for lead plaintiff status. To
be a member of the class you need not take any action at this time,
and you may retain counsel of your choice. If you wish to discuss
this action or have any questions concerning this Notice or your
rights or interests with respect to these matters, please contact
Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070
Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone
at (215)638-4847, Toll-Free at (888)638-4847, by email to
howardsmith@howardsmithlaw.com or visit our website at
http://www.howardsmithlaw.com.
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