National General Holdings Corp.

Case Details

Class Period:
August 6, 2015 – August 9, 2017
Date Filed:
July 25, 2019
Case Number:
2:19cv06468
Jurisdiction:
California Central District Court

Case Summary

The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding National General's business and operations. Specifically, the complaint alleges that defendants failed to disclose that National General, together with banking giant Wells Fargo, had engaged in a massive insurance scheme to bilk Wells Fargo customers out of millions of dollars. Through this scheme, National General forced thousands of customers to pay for auto insurance commonly known as Collateral Protection Insurance ("CPI") that they did not need or want. National General served as Wells Fargo's CPI vendor for all aspects of the program from July 2015 until the program was discreetly terminated in September 2016. Defendants possessed information showing that these customers already had their own insurance, but forced them to be subject to redundant, unnecessary, and overly expensive CPI policies anyway. In addition, while defendants were concealing their participation in the fraudulent CPI scheme from investors, they were reporting revenues and earnings results that had been artificially inflated by the illegitimate proceeds from the scheme. As a result of this information being withheld from the market, National General common stock traded at artificially inflated prices of more than $25 per share during the Class Period. Then, on July 27, 2017, The New York Times published an article that revealed for the first time the CPI forced-placed insurance scheme. The article cited an internal report commissioned by Wells Fargo's executives, which reportedly stated that more than 800,000 auto loan customers, including active military personnel, had paid for unnecessary CPI, pushing nearly 274,000 of them into delinquency and resulting in more than 20,000 unlawful vehicle repossessions. In the days that followed, attention increasingly turned to National General and its role in the scheme. The Company faced numerous regulatory investigations, congressional scrutiny, and civil lawsuits that caused a decline in the price of National General shares. Between July 26, 2017, before the story broke, and August 10, 2017, after the launch of a congressional inquiry into the scandal, the price of National General common stock fell more than 15%.

Action Details

View Complaint (pdf)

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