| Company: | Fairfax Financial Holdings Limited |
| Ticker Symbol: | FRFHF |
| Class Period: | May-21-03 to Mar-22-06 |
| Date Filed: | Jul-25-11 |
| Lead Plaintiff Deadline: | Sep-23-11 |
| Court: | Southern District of New York |
| Allegations: | |
The complaint charges Fairfax and certain of its officers and directors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Fairfax is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance, investment management and insurance claims management.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business practices and financial results. Specifically, Fairfax defrauded investors by inflating the value of its assets and concealing its lack of liquidity over the course of several years by fraudulently accounting for reinsurance contracts which were, in essence, loans by, among other things: (i) failing to employ adequate risk transfer tests to determine if reinsurance contracts qualified for "reinsurance" rather than "deposit" accounting; (ii) maintaining ineffective controls while assuring investors that the Company's controls were effective; (iii) using privately held foreign assets domiciled in jurisdictions with lax oversight to permit the Company to manipulate its investment income; (iv) failing to properly account for losses in companies that should have been consolidated with Fairfax; (v) improperly accounting for intercompany transactions; and (vi) using "investments" to funnel money to cash strapped subsidiaries.
On March 22, 2006, Fairfax revealed that the Securities and Exchange Commission ("SEC") had subpoenaed records of all of Fairfax's finite reinsurance contracts in the previous year and that the SEC had subpoenaed V. Prem Watsa, Fairfax's Chairman and Chief Executive Officer, in connection with his denials of Fairfax's use of finite reinsurance contracts. Fairfax's March 2006 announcement also disclosed that the Company's auditor, PricewaterhouseCoopers LLP Chartered Accountants, Toronto, Ontario Canada, received a subpoena from the SEC. In response to these disclosures, the price of Fairfax stock fell $19.97 per share, or 13%, to close at $113.93 per share, representing a decline in market capitalization of approximately $300 million. Then, on July 29, 2006, Fairfax revealed that the Company would have to restate its financials going back to 2001.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.
