PMA’s financial troubles have not only resulted in ratings downgrades (see previous article), but have also triggered the perhaps inevitable shareholder suit.
The law firm of Berman DeValerio Pease Tabacco Burt & Pucillo announced that “an investor has sued PMA Capital Corporation accusing the insurance company of misleading the public about its finances.”
The firm said, “The lawsuit was filed November 20, 2003 in the U.S. District Court for the Eastern District of Pennsylvania. Plaintiff seeks damages for violations of federal securities laws on behalf of all investors who bought PMA common stock from November 13, 1998 through and including November 3, 2003 (the Class Period).”
Basically the company is accused of overstating its earnings while underestimating its reserve adequacy. When reserves were strengthened earlier this month and the company began talking to Penna. regulators, the shares declined sharply.
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