By Order dated January 23, 2009, Judge Robert P. Patterson Jr. of the United States District Court for the Southern District of New York dismissed the entire amended complaint, finding that the plaintiff did not adequately plead: (1) the Securities Act claims because the amended complaint did not put forth sufficient factual allegations to find that the offering documents at issue contained any false and misleading statement; or (2) the Exchange Act claims because “the Complaint alleges no specific facts demonstrating Defendants possessed–at the time they made the allegedly false statements concerning the reserve amounts–information contradicting their statements.” The court noted that the amended complaint does little more than note that the company’s later announcements about its reserve losses differed from the earlier ones, without showing with any particularity that the Company’s reserve estimates were false and that the defendants knew they were false.
Court Dismisses Hurricane Reserve-Related Securities Class Action
On July 17, 2006, Washington State Plumbing and Pipefitting Pension Trust, on behalf of shareholders of Bermuda-based insurer Quanta Capital Holdings, Ltd. (“Quanta”), filed an amended securities class action complaint against Quanta and several of Quanta’ directors alleging that the registration and prospectus for Quanta’s common stock offering contained materially false and misleading statements in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and Sections 10(b) (including SEC Rule 10b-5 promulgated thereunder) and 20(a) of the 1934 Securities Exchange Act. The amended complaint alleged that the defendants misrepresented that Quanta failed to properly account for losses and to set aside adequate reserves to account for insurable Hurricane Katrina and Rita exposure, in order to maintain a favorable rating from A.M. Best Company.