Fairfax Financial Holdings accused of securities fraud in U.S. lawsuit
Fairfax Financial Holdings Ltd. was accused Thursday of securities fraud in a U.S. class action lawsuit that Fairfax characterized as both dated and frivolous.
The lawsuit was filed by Gilman and Pastor LLP in the United States District Court for the Southern District of New York on behalf of investors who bought shares of the company between May 21, 2003, and March 22, 2006.
The lawsuit alleges the company failed to disclose that its revenues and earnings were negatively impacted by increased competition and a number of significant operational problems that existed at the company.
However, Fairfax’s chief legal officer, Paul Rivett, said Thursday’s announcement was just one of several south of the border in recent weeks by class action law firms attempting to attract the most shareholders in an attempt to resurrect a suit that was originally filed in 2005.
The previous suit, filed in the U.S. but with a Canadian shareholder as lead plaintiff, was lost at trial and subsequently lost again on appeal, Rivett said.
“They are trying to do it again, but this time with U.S. shareholders,” he said, adding that it was highly unusual to file suit on something that happened six years ago and where the case has already been lost.
“We continue to believe it is a frivolous lawsuit without any merit and that we will proceed to trial,” he said.
Through its subsidiaries, Fairfax is principally engaged in property and casualty insurance and reinsurance and associated investment management.
On the Toronto Stock Exchange, Fairfax Financial stock closed up $6.33 at $385.05 on Thursday.
