According to a press release dated March 31, 2010, the complaint charges The Hartford and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Hartford is one of the largest investment and insurance companies based in the United States. The complaint alleges that during the Class Period, defendants made materially false and misleading representations regarding the Company’s business and prospects, including its capital position, investment risk and hedging program. Then, on February 5, 2009, after the markets closed, The Hartford was forced to report disastrous fourth quarter and 2008 year-end financial results. And while defendants had repeatedly assured the market throughout the Class Period that the Company’s capital position was sound and could fully support its current credit rating, that same day Moody’s downgraded The Hartford’s long-term senior debt rating and the Company’s P&C and life insurance subsidiaries. As a result of this news, The Hartford’s shares fell from $15.09 on February 5, 2009 to close at $12.68 per share on February 6, 2009.
According to the complaint, defendants were aware of material undisclosed information which contradicted their public statements during the Class Period, including, but not limited to, the following: (a) the Company’s regulatory capital position was weak and deteriorating throughout the Class Period; (b) the Company had built up massive exposure to losses from derivative investments, including credit default swap contracts, way beyond the “corporate bond” risk references included in The Hartford’s quarterly conference calls with analysts; (c) the Company had leveraged its risk significantly throughout the Class Period through a securities lending program in which it invested the cash collateral it received from third-party lenders in extremely risky investments, including residential and commercial mortgage-backed securities; (d) the Company’s hedging program was becoming increasingly expensive to maintain due to high volatility in the equity markets; (e) the Company’s financial results were continuing to deteriorate to a much greater extent than represented due to its exposure to the U.S. real estate market and credit default swap contracts; (f) the Company had failed to maintain adequate internal controls to adequately report losses from investments on a timely basis; (g) the Company was not on track to achieve the 2008 core earnings per share forecasted for and by the Company and continually misrepresented the effect market movements would have on such earnings; and (h) the Company overstated its book value by not accruing for liabilities for repayment of workers compensation insurance premiums consistent with what was actually justified.
On July 15, 2010, Judge Naomi Reice Buchwald appointed Arkansas Teacher Retirement System to serve as lead plaintiff. On August 12, 2010, Judge Naomi Reice Buchwald granted the motion to appoint Labaton Sucharow LLP and Nix, Patterson & Roach, LLP as Co-Lead Counsel for the Class. On October 8, 2010, the lead plaintiff filed an Amended Class Action Complaint. On November 5, 2010, the lead plaintiff filed another Amended Class Action Complaint, amending the class period. The defendants responded by filing a motion to dismiss on December 20, 2010.
On September 16, 2011, the action was dismissed with prejudice, and the case was closed on September 19th.