LITTLE ROCK, Ark., May 9, 2001 (PRIMEZONE) -- The Law Firm of Cauley Geller Bowman & Coates, LLP announced today that a class action has been filed in the United States District Court for the Eastern District of Pennsylvania on behalf of purchasers of Penn Treaty American Corporation ("Penn Treaty" or the "Company") (NYSE:PTA) common stock during the period between November 7, 2000 and March 29, 2001, inclusive (the "Class Period").
The complaint charges Penn Treaty and certain officers and directors with violating the federal securities laws by issuing a series of materially false and misleading statements about the Company's financial health. Penn Treaty underwrites and sells insurance products through its subsidiaries. The complaint alleges that during the Class Period, defendants reported that Penn Treaty was experiencing a tremendous growth in sales, and repeatedly said that the growth was not jeopardizing the Company's health, and that it had adequate reserves for the increased level of business.
The complaint charges that in fact, the company continued selling policies during its fourth quarter of 2000 despite an inability to maintain adequate reserve levels, and despite the fact that the Company's growth put its solvency at risk. In effect, Penn Treaty sold itself out of existence. Premiums grew by 22% during the fourth quarter of 2000. But instead of the $40 million in reserves required by regulators, the Company had just $17.2 million in capital by the end of the year. On March 30, 2001, Penn Treaty issued a new release stating that, among other things, its reserves had sunk so far below the statutory minimum that it faced possible liquidation and that its independent accountants were questioning the company's ability to remain a viable entity. After the announcement, Penn Treaty stock fell from a closing price of $17.46 on March 29, 2001 to $10.17 the next day - a 42% decline. Further revelations about the Company's inadequate reserves and financial problems drove down the stock price to nearly $3 a share by April 2, 2001.
If you bought Penn Treaty common stock between November 7, 2000 and March 29, 2001, inclusive, you may, no later than June 18, 2001 request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Cauley Geller Bowman & Coates, LLP, or other counsel of your choice, to serve as your counsel in this action.
Cauley Geller Bowman & Coates, LLP has substantial experience representing investors in securities fraud class action lawsuits such as this. The firm has offices in Florida, Arkansas and California, but represents shareholders from throughout the nation. If you have any questions about how you may be able to recover for your losses, or if you would like to consider serving as one of the lead plaintiffs in this lawsuit, you are encouraged to call or e-mail the Firm or visit the Firm's Website at www.classlawyer.com.
CAULEY GELLER BOWMAN & COATES, LLP Client Relations Department: Sue Null, Charlie Gastineau or Jackie Addison P.O. Box 25438 Little Rock, AR 72221-5438 Toll Free: 1-888-551-9944 E-mail: info@classlawyer.com
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca