Hallmark Financial Services Inc.
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Northern District of Texas on behalf of those who acquired Hallmark Financial Services Inc. (“Hallmark Financial” or the “Company”) (NASDAQ: HALL) securities during the period from March 5, 2019 through March 17, 2020. Investors have until July 7, 2020 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
The lawsuit alleges that Hallmark Financial failed to disclose that: (i) the Company lacked effective internal controls over accounting and financial reporting related to reserves for unpaid losses; (ii) the Company improperly accounted for reserve for unpaid losses and loss adjustment expenses related to its Binding Primary Commercial Auto business; (iii) as a result, Hallmark Financial would be forced to report a $63.8 million loss development for prior underwriting years; and (iv) as a result, Hallmark Financial would exit from its Binding Primary Commercial Auto business.
On March 2, 2020, Hallmark Financial issued a press release, stating that it “made the strategic decision to exit its Binding Primary Auto business.” On this news, the Company’s share price fell $2.10, or 14.6%, to close at $12.23 per share on March 3, 2020.
Then, on March 11, 2020, Hallmark Financial announced it had dismissed its independent auditor, BDO, over a “disagreement” concerning the Company’s estimated reserves for unpaid losses and loss adjustment expenses throughout 2019. On this news, the Company’s share price fell $2.39, or 29.5%, to close at $5.71 on March 12, 2020.
Finally, on March 17, 2020, Hallmark Financial disclosed a letter from BDO to the SEC revealing that, on January 31, 2020, BDO had significantly expanded the scope of its audit with respect to the matters of disagreement and that “a substantial portion of the requests had not been received and/or tested prior to [BDO’s] termination.”
If you acquired Hallmark Financial securities, have information, or would like to learn more about these claims, please contact Thomas W. Elrod of Kirby McInerney LLP at 212-371-6600, by email at firstname.lastname@example.org, or by filling out this contact form, to discuss your rights or interests with respect to these matters without any cost to you.