Tower Group International
On June 17, 2014, the Honorable Analisa Torres, United States District Judge for the Southern District of New York, entered an Order appointing The Kansas City, Missouri Employees’ Retirement System, Jacksonville Police and Fire Pension Fund, The Oklahoma Firefighters Pension & Retirement System, ADAR Enhanced Investment Fund, Ltd. and ADAR Investment Fund, Ltd. as Co-Lead Plaintiffs and Saxena White as Co-Lead Counsel. In Her Honor’s Order, Judge Torres noted that Saxena White “[has] significant experience in [the securities fraud class action] area and [is] well qualified to manage this litigation.”
Following an extensive investigation, on August 22, 2014, Lead Plaintiffs filed their Consolidated Class Action Complaint, asserting claims against Tower and certain members of the Company’s senior management and Tower’s prior auditor, PricewaterhouseCoopers LLP (“PwC”), under Section 10(b), Section 20(a), and Section 20A of the Exchange Act. Federal securities law and state law claims are also brought on behalf of investors that acquired shares of Canopius Bermuda in a March 7, 2013 private placement (the “PPC”). Plaintiffs allege that the Tower Defendants inflated Tower’s financial results, including its net income, by understating loss reserves and masking internal control deficiencies. It is further alleged that the prices of Tower securities were artificially inflated as a result of allegedly false and misleading statements, and declined when the truth was revealed. Beginning August 7 and 8, 2013, the truth regarding Company's loss reserves and internal controls surfaced as the Company postponed the release of its second quarter 2013 financial results and stated that it would increase its loss reserves by as much as $110 million. In response to the numerous partial disclosures, Tower’s stock price fell $18.81 per share from August 7, 2013 to December 17, 2013, representing a decline of nearly 90%. The Company increased its loss reserves by $570 million, and ultimately was forced to sell itself in a firesale.
On December 3, 2014, the Tower Defendants and PwC separately filed motions to dismiss the Consolidated Complaint. Thereafter, on December 23, 2014, Lead Plaintiffs filed an Amended Consolidated Class Action Complaint (the “Complaint”). On February 3, 2015, the Tower Defendants and PwC separately filed motions to dismiss the Complaint. Lead Plaintiffs filed their oppositions to the motions to dismiss on March 6, 2015. On April 17, 2015, the Tower Defendants and PwC filed their respective reply briefs in support of their respective motions to dismiss the Complaint. The parties thereafter submitted supplemental briefing regarding the recent decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, 135 S. Ct. 1318 (2015) (“Omnicare”), subsequent case law applying Omnicare, and the parties’ respective positions regarding how the decisions impacted the pending motions to dismiss.
On June 22, 2015, a joint letter was submitted to the Court, informing it that Plaintiffs reached an agreement to settle the outstanding claims against the Tower Defendants. Plaintiffs’ claims against PwC are still pending. On July 21, 2015, Lead Plaintiffs filed a Stipulation of Settlement and Motion for Preliminary Approval of Settlement relating to the settlement with the Tower Defendants.
On August 13, 2015, the Court preliminarily approved the proposed settlement. Following the November 23, 2015 final approval hearing, the Court finally approved the partial settlement by Order that same day.