SAN DIEGO & FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against Patriot National, Inc. (NYSE: PN) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Patriot National securities between August 15, 2016 and March 3, 2017, for alleged violations of the Securities Exchange Act of 1934 by Patriot National's officers and directors. Patriot National, together with its subsidiaries, provides technology-enabled outsourcing solutions within the workers compensation marketplace for insurance carriers, local governments, reinsurance captives, and other employers in the United States.
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Patriot National Accused of Enabling Biased Special Committee
According to the complaint, on August 15, 2016, Patriot National confirmed that the special committee of its board of directors was working with Ebix, Inc. to possibly combine the two businesses. Then, on November 8, 2016, Patriot National announced that it was rejecting a $475 million proposal from Ebix. In a subsequent conference call with analysts, Steven M. Mariano, Chief Executive Officer of Patriot National, stated that the Ebix transaction was rejected because the company had a better offer from someone else. However, the complaint alleges that Patriot National officials failed to disclose that the special committee was beholden to Mariano, was operating for the benefit of Mariano, did not independently assess the merits of the Ebix transaction, and was not exploring strategic alternatives to maximize shareholder value.
On March 3, 2017, Patriot National disclosed that it entered into an agreement with Guarantee Insurance Group ("GIG") and Mariano, majority owner of both Patriot National and GIG, regarding the service agreements between the company and GIG's wholly-owned subsidiary Guarantee Insurance Company. Under the agreement, the company paid GIG $30 million. The company further disclosed that "[a]s further material inducements for the company's payment," GIG and Mariano agreed to a series of corporate and financial covenants, including that the company would not enter into any transaction with an affiliate of Mariano without the prior approval of a majority of independent directors. On this news, Patriot National's stock fell $0.72 per share, or 16.4%, to close at $3.67 per share on March 6, 2017, and continued to decline in the following days, closing at $3.01 per share on March 8, 2017.
Patriot National Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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