Murray, Frank & Sailer LLP Files Class Action Against CRM Holdings, Ltd.
NEW YORK (BUSINESSWIRE) -- Murray, Frank & Sailer LLP has filed a class action complaint in the United States District Court for the Southern District of New York (Case No. 10 Civ. 975) on behalf of all individuals and institutions who purchased CRM Holdings, Ltd. ("CRM Holdings" or the "Company") publicly traded securities during the period between December 21, 2005 and November 5, 2008 (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act").
If you are a member of the class described above, you may move the Court, not later than April 6, 2010, to serve as Lead Plaintiff for the Class. A Lead Plaintiff is a representative chosen by the Court who acts on behalf of other class members in directing the litigation. You do not need to be a Lead Plaintiff to be included in the class. If you purchased CRM Holdings securities and wish to discuss this litigation, or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Eva Hromadkova at (800) 497-8076, (212) 682-1818, or via email at [email protected]
The Complaint alleges that throughout the Class Period CRM Holdings, a provider of workers' compensation insurance products, and other defendants knew or recklessly disregarded that their public statements concerning CRM Holdings' financial performance and prospects were materially false and misleading. Specifically, defendants made false and/or misleading statements and/or failed to disclose: (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 (the "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.
Murray, Frank & Sailer LLP