Law Offices of Howard G. Smith, Representing Investors of CRM Holdings, Ltd., Announces Class Action Lawsuit

BENSALEM, Pa.--(BUSINESS WIRE)-- Law Offices of Howard G. Smith, representing investors of CRM Holdings, Ltd. (“CRM Holdings” or the “Company”) (NASDAQ:CRMH), has filed a class action lawsuit in United States District Court on behalf of a class (the “Class”) consisting of all persons or entities who purchased CRM Holdings securities between December 21, 2005 and November 5, 2008, inclusive (the “Class Period”). The class action lawsuit was filed in the United States District Court for the Southern District of New York.

The Complaint charges CRM Holdings and certain of the Company’s executive officers and directors with violations of federal securities laws. CRM Holdings is a provider of workers' compensation insurance products. The Complaint alleges that throughout the Class Period defendants knew or recklessly disregarded and failed to disclose or indicate the following: (1) that defendants and their affiliates engaged in a fraudulent scheme and course of business to grow membership in eight self-insured groups (the “Trusts”) previously administered by CRM, by charging premiums below commercial rates; (2) that the membership growth inflated gross trust revenues while reducing net paid premium income to the level that the assets of the Trusts would become insufficient to cover liabilities; (3) that, accordingly, the Trusts would fall below “fully funded” status; (4) that, as part of their fraudulent scheme and course of business to cover up the difference between assets and liabilities, defendants and their affiliates disguised the true financial conditions of the Trusts by engaging in certain improprieties designed to result in minimal projected claims liability, including under-reserving individual claims and utilizing improper actuarial/accounting methods; (5) that defendants and their affiliates provided the New York State Workers’ Compensation Board (WCB) with materially false and/or misleading financial and actuarial reports for the Trusts which reflected artificially reduced liabilities; (6) that, as a result of the above, the Company was exposed to hundreds of millions of dollars in liabilities relating to the under-funding of the Trusts; (7) that the Company lacked adequate internal and financial controls; and (8) that, as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.

On October 3, 2008, CRM Holdings disclosed that it had received a letter from the WCB indicating its intention to initiate legal proceedings against the Company on behalf of the Trusts related to CRM Holdings' actions while acting as the administrator and broker of record for the Trusts. On this news, over the next two days of trading, shares of CRM Holdings declined $0.61 per share, or 24.31%, to close on October 7, 2008 at $1.91 per share.

Then, on November 5, 2008, CRM Holdings reported its financial results for the 2008 fiscal third quarter and announced that during third quarter the Company had approximately $2.5 million of loss reserve increases that would have otherwise been reflected in the first and second quarter of 2008.

As a result of this news, over the following three days of trading, CRM Holdings shares declined $0.58 per share, or more than 36%, to close on November 7, 2008, at $1.03 per share, on high volume.

No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased CRM Holdings securities between December 21, 2005 and November 5, 2008, you have certain rights, and have until April 6, 2010, to move for lead plaintiff status. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice. If you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215)638-4847, Toll-Free at (888)638-4847, by email to [email protected] or visit our website at http://www.howardsmithlaw.com.

Law Offices of Howard G. Smith
Howard G. Smith, Esquire
(215) 638-4847
(888) 638-4847
[email protected]
www.howardsmithlaw.com

Source: Law Offices of Howard G. Smith