Law Firm Files Class Action Lawsuit Against Manulife Financial
Jul 13, 2009 (Datamonitor via COMTEX) -- Abbey Spanier Rodd & Abrams has filed a class action lawsuit in the US District Court for the Southern District of New York on behalf of a class consisting of all persons or entities who purchased the securities of Manulife Financial between March 28, 2008 and June 22, 2009.
The complaint charged Manulife and certain of the company's executive officers with violations of federal securities laws.
On June 19, 2009, after the market closed, Manulife received an enforcement notice from the Ontario Securities Commission (OSC) relating to its disclosure of risks concerning its variable annuity guarantee and segregated funds business.
The OSC notice stated that Manulife failed to meet its continuous disclosure obligations related to its exposure to market price risk in its variable annuity guarantee and segregated fund contracts business.
The complaint alleged that Manulife made false and misleading statements regarding its ability to manage and control risk. In fact, contrary to the company's own risk management strategy, Manulife applied no material hedging strategy to manage risk particularly during an economic downturn.
The complaint further alleged that notwithstanding its risk management strategy Manulife built up a massive stock portfolio, which it chose to leave unhedged. This resulted in a huge decline in the funds available to guaranty the separate fund contract obligations, forcing the company to raise billions in capital to make up for a widening shortfall in the amount it had promised to pay customers decades from now.
Stunned investors responded to the OSC's announcement when trading markets reopened on June 22, 2009, according to the law firm. The company's shares dropped 12% to close at $17.67 on an unusually high trading volume of almost eight million shares.
Plaintiff seeks to recover damages on behalf of class members and is represented by Abbey Spanier Rodd & Abrams.
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