January 14, 2020 - An amended complaint was filed.
July 25, 2019 - An investor in shares of National General Holdings Corp (NASDAQ: NGHC) filed a lawsuit in the U.S. District Court for the Central District of California over alleged violations of Federal Securities Laws by National General Holdings Corp in connection with certain allegedly false and misleading statements made between August 6, 2015 and August 9, 2017.
New York based National General Holdings Corp. is a specialty personal lines insurance holding company. National General Holdings Corp reported that its annual Total Revenue rose from over $2.48 billion in 2015 to over $3.52 billion in 2016 and that its Net Income increased from $142.25 million in 2105 to $172.22 million in 2016.
Shares of National General Holdings Corp (NASDAQ: NGHC) grew from $17.87 per share in march 2015 to as high as $25.33 per share in February 2017.
On July 27, 2017, an article was published that revealed for the first time the Collateral Protection Insurance forced-placed insurance scheme. The article cited an internal report commissioned by Wells Fargo’s executives, which reportedly stated that more than 800,000 auto loan customers, including active military personnel, had paid for unnecessary CPI, pushing nearly 274,000 of them into delinquency and resulting in more than 20,000 unlawful vehicle repossessions. In the days that followed, attention increasingly turned to National General Holdings Corp and its role in the scheme. The Company faced numerous regulatory investigations, congressional scrutiny, and civil lawsuits that caused a decline in the price of National General shares
On August 8, 2017, Commissioner Dave Jones ordered the California Department of Insurance “to open an investigation into recent allegations that Wells Fargo and National General Insurance improperly charged consumers for ‘force-placed’ or ‘lender-placed’ auto insurance for consumers who had auto loans with Wells Fargo.” National General Holdings Corp was an underwriter of the insurance.
Shares of National General Holdings Corp (NASDAQ: NGHC) declined to as low as $17.95 per share on August 10, 2017.
According to the complaint the plaintiff alleges on behalf of purchasers of National General Holdings Corp (NASDAQ: NGHC) common shares between August 6, 2015 and August 9, 2017, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between August 6, 2015 and August 9, 2017, the defendants failed to disclose that National General, together with banking giant Wells Fargo, had engaged in a massive insurance scheme to bilk Wells Fargo customers out of millions of dollars, that through this scheme, National General forced thousands of customers to pay for auto insurance – commonly known as Collateral Protection Insurance (“CPI”) – that they did not need or want. National General served as Wells Fargo’s CPI vendor for all aspects of the program from July 2015 until the program was discreetly terminated in September 2016, that Defendants possessed information showing that these customers already had their own insurance, but forced them to be subject to redundant, unnecessary, and overly expensive CPI policies anyway, and that in addition, while defendants were concealing their participation in the fraudulent CPI scheme from investors, they were reporting revenues and earnings results that had been artificially inflated by the illegitimate proceeds from the scheme.