PHILADELPHIA, Nov. 20, 2003 (PRIMEZONE) -- An investor sued PMA Capital Corporation (Nasdaq:PMACA) today, accusing the insurance company of misleading the public about its finances, Berman DeValerio Pease Tabacco Burt & Pucillo announced.
The lawsuit was filed in the U.S. District Court for the Eastern District of Pennsylvania. Plaintiff seeks damages for violations of federal securities laws on behalf of all investors who bought PMA common stock from November 13, 1998 through November 3, 2003 (the Class Period).
Berman DeValerio has represented investors in class actions for more than 20 years. To receive a copy of the complaint, you may contact the court, call the firm at (800) 516-9926 or go to the firm's website at www.bermanesq.com.
The lawsuit claims that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by issuing a series of material misrepresentations to the market, causing the company's stock to reach an artificially high price.
Throughout the Class Period, the complaint says, PMA reported strong financial results and stated that the company had adequate loss reserves. But the company's seemingly strong financial results were based on improper reserving practices, according to the lawsuit.
The complaint says PMA failed to establish adequate reserves for claims arising from its reinsurance operations and for loss adjustment expenses, representing the estimated expenses for settling claims. As a result, PMA understated its liabilities and expenses and artificially inflated earnings, assets and equity during the Class Period, plaintiffs allege.
The truth began to emerge on November 4, 2003, when PMA announced that it would record a pre-tax charge of approximately $150 million to compensate for inadequate loss reserves at PMA Re, the company's reinsurance operations. PMA also disclosed that an internal review had found higher-than-expected underwriting losses in the reinsurance operations. In addition, PMA revealed that it was in discussions with the Pennsylvania Insurance Department over the company's insurance business.
As a result of the news, PMA's stock price plummeted approximately 62% on November 4 to close at $5.03, down from a closing price of $13.14 the previous day.
Then, on November 6, 2003, PMA announced that it would withdraw from the reinsurance business entirely and that the company's chairman, Frederick W. Anton, and chief executive officer, John W. Smithson, had both resigned.
The complaint names as defendants the company, Anton, Smithson and two other individuals who were top officers at the company during the Class Period.
If you purchased PMA Capital Corporation stock during the period of November 13, 1998 through November 3, 2003, you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests.
N. Nancy Ghabai, Esq. Jeffrey C. Block, Esq. One Liberty Square Boston, MA 02109 (800) 516-9926 law@bermanesq.com
If you wish to apply to be lead plaintiff in this action, a motion must be filed on your behalf with the court no later than January 5, 2004. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action. You may also retain counsel of your choice. To be a member of the class, however, you need not take any action at this time.
Berman DeValerio Pease Tabacco Burt & Pucillo prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations, and consumer fraud. The firm consists of 35 attorneys in Boston, San Francisco, and West Palm Beach, Florida.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca