According to a press release dated January 13, 2012, the complaint charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The complaint alleges that, as a result of the Company’s death benefits practices and procedures, during the Class Period, defendants caused the Company to issue materially false and misleading statements concerning the Company’s current and future financial condition and its potential liability to policyholders, their beneficiaries or relevant state authorities for millions of dollars in benefits that should have been paid out to policyholders or escheated to the states.
On August 5, 2011, the Company disclosed in its Form 10-Q filed with the SEC that regulatory investigations into its death benefits practices could result in additional escheatment to the states and administrative penalties, the costs of which could be substantial. This disclosure caused the Company’s stock price to decline 11% by the next trading day. Then, on October 6, 2011, the Company filed a Form 8-K with the SEC, stating among other things that it would take at least a $115 million after-tax charge to increase its reserves in connection with its death benefits practices. On this news, the Company’s stock price declined from $30.69 on October 6, 2011 to $28.80 on October 7, 2011.
According to the complaint, defendants’ statements during the Class Period were each materially false and misleading in that defendants knew or recklessly disregarded that: (a) the Company had not properly or adequately reserved for the payment of benefits to policyholders’ beneficiaries when it knew or had reason to know the policyholders were deceased; (b) the Company’s historical processes, policies and procedures were inadequate to identify current liabilities related to policyholders which had died but whose beneficiary claims had not yet been made; (c) the Company knew to be false its assurances that the allegations regarding the Company’s death benefits practices were without merit; and (d) defendants knew that the Company’s financial results and guidance for its operating earnings during the Class Period were false.
On March 29, 2012, the Court granted the motion to be appointed lead plaintiff and to approve the selection of lead counsel. On May 14, 2012, the plaintiffs filed their amended complaint.
On February 28, 2013, the Court issued a Memorandum Opinion granting in part and denying in part defendants' motions to dismiss the amended complaint. On March 14, plaintiffs filed a Motion for partial reconsideration of the above Opinion. The Court issued an Order denying this Motion on March 15.
On November 10, 2016, the Court issued an Order granting in part and denying in part Defendants' Motion to Dismiss.