NEW YORK, Sept. 9, 2019 /PRNewswire/ -- Bragar Eagel & Squire, P.C. announces that a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of all investors that purchased Amtrust Financial Services, Inc. (Other OTC: AFSIA, AFSIB, AFSIC, AFSIM, AFSIN, AFSIP) preferred stock between September 22, 2018 and January 18, 2019 ("the "Class Period"). Investors have until October 28, 2019 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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Pursuant to an Agreement and Plan of Merger, dated March 1, 2018, as amended on June 6, 2018 (the "Amended Merger Agreement," collectively, the "Merger Agreement"), between AmTrust, Evergreen Parent, L.P. ("Parent"), and Evergreen Merger Sub., Inc. ("Merger Sub"), the Karfunkel-Zyskind Family and Case private equity firm Stone Point Capital LLC ("Stone Point") acquired the 45% of AmTrust's minority common shares that the Family did not own for $14.75 per share (the "Merger" or the "Buyout").
According to the complaint, filed August 28, 2019, only the common stock was acquired in the Merger. However, AmTrust also had approximately a billion dollars' worth of issued preferred stock outstanding, which had only been issued a few years before (from 2013 to 2016). The cost to acquire the recently issued preferred stock, had the merger been so designed, would have materially increased the cost of the Merger to the Karfunkel-Zyskind Family and Stone Point ("Acquirers"). Upon the announcement of a potential Merger, stockholders and stock market professionals repeatedly expressed concern over the future of the preferred stock. Further, many holders of preferred stock also owned common stock that was being solicited by AmTrust and the Karfunkel-Zyskind Family to vote in favor of the Merger. Accordingly, in order to allay concerns of those common stock investors who also owned preferred stock and the market about the future of the preferred stock, and to encourage preferred stockholders who also held common stock to vote in favor of the Merger, defendants publicly and repeatedly reassured investors about the future for AmTrust's preferred stocks. Specifically, defendants informed the investing market that, unlike the common shares, which were being acquired in the Buyout, the six series of publicly traded AmTrust preferred stock— which had been sold to public retail investors with the explicit commitment in the underwriting documents that they would be listed on the New York Stock Exchange ("NYSE")—were not being purchased in the Merger, but, as represented in the Buyout proxy, would continue to be listed on the NYSE and would remain listed and outstanding following the Merger. Contrary to these numerous and oft-issued public representations, less than two months following the close of the Merger, on January 18, 2019, AmTrust announced it would delist all six series of AmTrust preferred stock from the NYSE, attempting to legitimize the delisting based on the contrived excuse "that the administrative costs and burdens associated with maintaining the listings on the NYSE and the registration exceed the benefits" and that there was a new "ownership structure" due to the Merger. Since these costs and burdens and new ownership structure were known or had to have been known during the entire time defendants were publicly proclaiming that the preferred stock would remain listed, the only logical conclusion is that defendants never intended or were deliberately reckless when making their public statements that the preferred stock would remain listed on the NYSE.
Immediately upon the announcement of the delisting, the prices of the preferred stocks dropped by almost 40% the very next trading day, with the preferred stocks losing hundreds of millions of dollars in value.
If you purchased AmTrust preferred stock during the Class Period, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Melissa Fortunato by email at email@example.com, or telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
Bragar Eagel & Squire, P.C. is a New York-based law firm concentrating in commercial and securities litigation. For additional information concerning the AmTrust lawsuit, please go to https://bespc.com/amtrust-3. For additional information about Bragar Eagel & Squire, P.C. please go to www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
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