A securities class action lawsuit was recently filed against major insurance firm, Genworth Financial, Inc., as well as certain corporate officials.
Securities class action lawsuit details
Bernstein Litowitz Berger & Grossmann LLP brought forth this legal action on the behalf of the City of Pontiac General Employees' Retirement System. In terms of the broader class, the law firm filed the suit to represent all investors in the firm's securities between Dec. 4, 2013 and July 29, 2014. These dates are inclusive, and constitute the class period.
The securities class action asserted claims under the Securities Exchange Act of 1934, and was titled City of Pontiac General Employees' Retirement System v. Genworth Financial, Inc., 14-cv-682.
Similar suit filed
The Bernstein legal action is certainly not the only one of its kind, as a similar lawsuit was filed against Genworth Financial, and certain senior executives, by Lieff Cabraser Heimann & Bernstein, LLP. This legal motion named the same class period of Dec. 4, 2013 and July 29, 2014, and alleged these defendants breached the Securities Exchange Act of 1934.
The Lieff suit claimed the defendants did not not reveal, and or made statements that were false and or misleading, about several key matters pertaining to the company's long-term care (LTC) business.
More specifically, the the major insurance firm failed to disclose that it would need to bolster its reserves due the growing number and value of LTC claims, the suit alleged. In addition, the class action claimed that due to the preceding, the company provided statements that were materially false and misleading, and lacked a reasonable basis, pertaining its operations, business and prospects.
Bernstein suit allegations
The Bernstein suit made similar allegations, claiming that Genworth either concealed or misrepresented its ability to generate consistent margins in its LTC business, the sufficiency of reserves for its LTC division and the firm's capacity to manage this particular segment.
Company discloses financial results
On July 29, 2014, the company revealed that during the second quarter, LTC generated net operating income of $6 million, compared to $46 million in the first three months of the year.
In addition, Genworth announced that it might need to bolster its LTC claims reserves, and that it intended to evaluate the reserves it had for this business segment.
The Bernstein class action lawsuit alleged that when market participants discovered the true nature of the major insurance firm's situation, company stock fell to $13.98 per share from $16.26, a decline of approximately 14 percent. This drop happened amid heavy trading volume.