LOS ANGELES--(BUSINESS WIRE)--The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired Hallmark Financial Services, Inc. (“Hallmark Financial” or the “Company”) (NASDAQ: HALL) securities between March 5, 2019 and March 17, 2020, inclusive (the “Class Period”). Hallmark Financial investors have until July 6, 2020 to file a lead plaintiff motion.
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On March 2, 2020, Hallmark Financial announced that it had decided to exit from its Binding Primary Commercial Auto business and reported a $63.8 million loss development for prior underwriting years.
On this news, the Company’s share price fell $2.10, or more than 14%, to close at $12.23 per share on March 3, 2020, on unusually heavy trading volume.
On March 11, 2020, Hallmark Financial disclosed that it had dismissed its independent auditor, BDO USA, LLP (“BDO”), due to a disagreement regarding estimates for reserves for unpaid losses, among other things.
On this news, the Company’s share price fell $2.39, or over 29%, to close at $5.71 per share on March 12, 2020, on unusually heavy trading volume.
On March 17, 2020, Hallmark Financial filed with the SEC a letter from BDO in which BDO stated “BDO expanded significantly the scope of its audit on January 31, 2020, with respect to which a substantial portion of the requests had not been received and/or tested prior to our termination.”
On this news, the Company’s share price fell $0.08, or 2.5%, to close at $3.12 per share on March 18, 2020.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company lacked effective internal controls over accounting and financial reporting related to reserves for unpaid losses; (2) that the Company improperly accounted for reserve for unpaid losses and loss adjustment expenses related to its Binding Primary Commercial Auto business; (3) that, as a result, Hallmark Financial would be forced to report a $63.8 million loss development for prior underwriting years; (4) that, as a result, Hallmark Financial would exit from its Binding Primary Commercial Auto business; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
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If you purchased Hallmark Financial securities during the Class Period, you may move the Court no later than July 6, 2020 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased Hallmark Financial securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to firstname.lastname@example.org, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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