Plaintiffs have charged a securities lawsuit to Quanta Capital Holdings Ltd. for misleading investors regarding the company’s losses from Hurricanes Katrina and Rita in 2005.
The suit, which was filed last week in US district court in New York, alleges that the Bermuda-based insurer and reinsurer released false prospectus statements concerning the December offer of nearly 15 million common and preferred shares.
Quanta, allegedly, estimated net losses of $62.5 million in the fourth quarter of 2005 as a result of the hurricanes. However, in March 2006, the company increased the figures to $78.7 million. And the suit alleges that this news prompted Quanta’s stock price to go down by nearly 40%.
The securities class action lawsuit names Quanta and some management officials including: James J. Ritchie, chairman of the board; Jonathan J.R. Dodd, chief financial officer; Robert Lippincott III, deputy chairman of the board; and Michael J. Murphy, Nigel W. Morris, W Russell Ramsey and Wallace L. Timmeny, all former directors on Quanta’s board.
On the other hand, Friedman, Billings & Ramsey Ltd, and BB&T Capital Markets of Winston-Salem, N.C., are named defendants of their role as underwriters of the stock offering. The suit still seeks class action status as of this writing.
The class includes buyers of Quanta’s stock between Dec 14, 2005 and March 2, 2006. The suit states that there are potentially thousands of members in the proposed class.