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Oklahoma City, OK (May 7, 2020) – On May 5, 2020, a securities class action lawsuit was filed in the United States District Court for the Northern District of Texas against Hallmark Financial Services, Inc. (NASDAQ: HALL). The complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material or false misrepresentations to the market which had the effect of artificially inflating the market price during the Class Period, which is March 5, 2019 through March 17, 2020. More specifically, the complaint filed 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.
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 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.
Plaintiff seeks to recover damages on behalf of all Hallmark Financial Services, Inc. shareholders who purchased common stock during the Class Period and are therefore a member of the Class as described above. You may move the Court no later than Monday, July 6, 2020 to serve as a lead plaintiff for the entire Class. However, in order to do so, you must meet certain legal requirements pursuant to the Private Securities Litigation Reform Act of 1995.
If you wish to discuss this action, obtain further information and participate in this or any other securities litigation, or should you have any questions or concerns regarding this notice or preservation of your rights, please contact: Robin Hester at firstname.lastname@example.org