San Francisco, California--(Newsfile Corp. - May 4, 2020) - Hagens Berman urges investors in Hallmark Financial Services, Inc. (NASDAQ: HALL) who have suffered significant losses to submit their losses now. The firm is investigating possible securities law violations and certain investors may have valuable claims.
Hall Financial Services (HALL) Investigation:
The investigation concerns the accuracy of Hallmark's reported financial results, including its loss reserve accounting for its troubled Binding Primary Commercial Auto business line.
In past quarters, Hallmark Financial hyped its underwriting and claims management for its commercial auto business line. Though loss reserves for this line crept higher, Hallmark emphasized its high claim closure rates, limiting the potential for significant additional reserve development.
But on Mar. 2, 2020, Hallmark announced it was exiting the Binding Primary Commercial Auto business and taking a $56.1 million reserve charge in 4Q19 (primarily related to the Binding Commercial Auto book).
Then, on Mar. 11, 2020, Hallmark announced it had dismissed its independent auditor BDO over a "disagreement" concerning the Company's estimated reserves for unpaid losses and loss adjustment expenses throughout 2019.
Finally, on Mar. 17, 2020, Hallmark disclosed a letter from BDO to the SEC revealing that BDO had expanded significantly the scope of its audit on Jan. 31, 2020, with respect to the matters of disagreement, and that "a substantial portion of the requests had not been received and/or tested prior to our termination."
By this time, the price of Hallmark shares had fallen $11.13, or down about 77%, from its closing price on Mar. 2, 2020.
"We're focused on, among other things, whether Hallmark Financial Services may have misled investors about the sufficiency of its loss reserves," said Reed Kathrein, the Hagens Berman partner leading the investigation.
Whistleblowers: Persons with non-public information regarding Hallmark should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email HALL@hbsslaw.com.
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