HCC Insurance Holdings, Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

HCC Insurance Holdings, Inc. Summary: According to a press release dated February 8, 2008, HCC Insurance Holdings, Inc. announced that it has reached a settlement, subject to court approval, with the plaintiffs in class action litigation relating to the Company's historic stock option granting practices. The company previously announced on January 9, 2008 that it had reached a settlement in the shareholder derivative litigation regarding the stock option matter. With today's announcement, all private securities litigation pending against the Company regarding the stock option matter has been resolved. The terms of the settlement, which includes no admission of liability or wrongdoing by HCC or any other defendants, provide for a full and complete release of all claims in the litigation and payment of $10 million to be paid into a settlement fund, pending approval by the Court of a plan of distribution. The $10 million will be paid by the Company's directors' and officers' liability insurers, and will not have a material effect on HCC's financial results. Once approved, the settlement will resolve all class action litigation pending against the Company, as well as its former and current directors and officers.

On March 13, 2007, the plaintiff filed a First Amended Complaint. On May 30, 2007, Judge Sim Lake granted the motion to appoint the Massachusetts Public Pension Funds as lead plaintiff and for approval of selection of counsel. On July 20, 2007, a Second Amended Complaint was filed.

The original complaint alleges that Defendants violated Sections 10(b), 20(a) and 14(a) of the Securities Exchange Act of 1934 and Rule 10b-5, and Rule 14(a)-1 to 14(a)-9 promulgated thereunder. Specifically, the complaint alleges that Defendants: (1) backdated stock option grants, such that the description of the Company's granting practices in the Company's financial reports were untrue; (2) the Company's reported earnings and shareholders' equity was artificially inflated in each of its financial reports during the Class Period due to understated compensation expenses; and, (3) the Company's financial reports were not presented in accordance with GAAP and were artificially inflated and did not accurately present the Company's actual performance.

The complaint further alleges that on November 16, 2006, after the market closed, HCC announced that it had backdated option grant dates from 1997 through 2006 and that it would restate financial reports previously filed with the SEC and disseminated to investors in press releases. In response to this announcement, the price of HCC stock dropped materially falling from a close of $31.64 on November 17, 2006, to a low of $28.81 on November 20, 2006 (the next trading day), representing a one-day share price decline of 9% on volume of 6.6 million shares.

On July 17, 2008, an Order was entered approving a Plan of Allocation, another Order granted a Motion for Attorney Fees. On the same day, an Order and Final Judgment was also entered, thus settling the case. On December 28, 2009, an order concerning distribution of net settlement fund to authorized claimants and related matters was entered into the court’s docket.

INDUSTRY CLASSIFICATION:
SIC Code: 6331
Sector: Financial
Industry: Insurance (Prop. & Casualty)

COMPANY/ISSUER NAME:	HCC Insurance Holdings, Inc.
COMPANY/ISSUER TICKER:	HCC
COMPANY WEBSITE:	http://www.hcch.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Bristol County Retirement System, et al. v. HCC Insurance Holdings, Inc., et al.

COURT: S.D. Texas	DOCKET NUMBER: 07-CV-00801
JUDGE NAME: Hon. Keith P. Ellison
DATE FILED: 03/08/2007	SOURCE: Notice of Filing
CLASS PERIOD START: 05/03/2005	CLASS PERIOD END: 11/17/2006
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Chargois & Herron LLP 2201 Timberloch Place. Ste 110, The Woodlands, TX, 77380 (voice) 281.444.0604, (fax) 281.440.0124, Labaton Sucharow & Rudoff LLP 100 Park Avenue, 12th Floor, New York, NY, 10017 (voice) 212.907.0700 , (fax) 212.818.0477 , info@labaton.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint for Violations of the Federal Securities Laws - Jury Trial Demanded
Type: Complaint		Date on the document: 03/08/2007
First Amended Class Action Complaint for Violation of the Federal Securities Laws
Type: Complaint		Date on the document: 03/13/2007
Order Appointing The Massachusetts Public Pension Funds As Lead Plaintiff And For Approval Of Selection Of Counsel
Type: Order		Date on the document: 05/30/2007
U.S. District Court Civil Docket
Type: Docket		Date on the document: 12/28/2009

REFERENCE COMPLAINT

In Re: HCC Insurance Holdings, Inc. Securities Litigation

COURT: S.D. Texas	DOCKET NUMBER: 07-CV-00801
JUDGE NAME: Hon. Sim Lake
DATE FILED: 07/20/2007	SOURCE: Docket
CLASS PERIOD START: 05/03/2005	CLASS PERIOD END: 11/17/2006
TYPE OF COMPLAINT: Second Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Labaton Sucharow LLP 140 Broadway, New York, NY, 10005 (voice) 212.907.0700, (fax) 212.818.0477, info@labaton.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 1

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Amended Class Action Complaint
Type: Complaint		Date on the document: 07/20/2007
Preliminary Approval Order
Type: Order		Date on the document: 01/29/2008
Stipulation and Agreement of Settlement
Type: Settlement		Date on the document: 3/25/2008
Notice Of Pendency Of Class Action And Proposed Settlement, Motion For Attorneys’ Fees And Settlement Fairness Hearing
Type: Notice		Date on the document: 4/17/2008
Order
Type: Order		Date on the document: 7/17/2008
Order And Final Judgment
Type: Order		Date on the document: 7/17/2008
Order Approving Plan Of Allocation
Type: Order		Date on the document: 7/17/2008
US District Court Civil Docket
Type: Docket		Date on the document: 7/17/2008
Order Concerning Distribution Of Net Settlement Fund To Authorized Claimants And Related Matters
Type: Order		Date on the document: 12/28/2009

OTHER DOCUMENTS
Order and Final Judgment
Case Name and/or Number: Bacas, et al. v. Way, et al.
Type: Order		Date on the document: 4/1/2008

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