Lawsuit Requests Class-action Status Against Phoenix

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A federal lawsuit against The Phoenix Cos. claims that people who bought Phoenix securities between mid-2009 and late 2012 suffered losses because the company’s financial reports were based on false or misleading information — financial reports the company still has not restated.

Lawyers for Phoenix shareholder Robert Strougo are seeking class-action status on behalf of anyone who bought Phoenix securities between May 5, 2009, and Nov. 6, 2012, according to the lawsuit filed last week.

In November 2012, the company’s managers concluded that Phoenix’s financial statements for 2009, 2010 and 2011 and the first two quarters of 2012 had errors, according to a company filing with the U.S. Securities and Exchange Commission.

Phoenix’s stock declined by $2.68 to close at $25.31 on Nov. 8, 2012, the day Phoenix said it would have to restate financial documents, according to the lawsuit.

Phoenix executives knew the company’s financial statements were false and misleading, or they acted with reckless disregard for the truth by failing to recognize the errors, the plaintiff’s lawyers claim. The plaintiff seeks money to cover damages, attorneys’ fees and other court related costs.

“While we will not comment on this case specifically, lawsuits of this type are not unusual when a company is restating its financial results, and we intend to vigorously defend against the allegations in the complaint,” Phoenix spokeswoman Alice S. Ericson said in a prepared statement.

Restatement Delay

On Wednesday, Phoenix told federal regulators the company needs more time to restate its financial performance.

The company said in November it planned to restate its financial reports by the deadline for its 2012 annual report. Phoenix pushed back that deadline last month, saying they would update bondholders April 30. On Wednesday, the boutique life insurer and annuity company asked its bondholders to agree to another extension.

Phoenix has made “significant progress” toward restating its financial performance and will provide another update by May 31, the company said in a filing Wednesday with the U.S. Securities and Exchange Commission.

However, Phoenix might not be able to file quarterly reports on time for the first three quarters of this year, according to the SEC filing. The company is asking bondholders to consent to its delay. Phoenix says it expects to file a third-quarter 2012 report, an annual report for last year and quarterly reports for the first three quarters of 2013 by Dec. 31.

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by Politico.com, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (businessjournalism.org, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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2 thoughts on “Lawsuit Requests Class-action Status Against Phoenix

  1. Gareth Bale PFA

    The Board of Directors have let this company down. They haven’t protected the shareholders interest nor have they hired a good management, rather lining their pockets and rather recklessly watched things implode with rating,sales and now shareholder equity.

    They even got notice for delisting from NYSE and have 6 months to get the restatement done.

    A sad tale for a Historic Hartford Company.

  2. Insurance Girl

    They refused TARP and hired internally which proved to be a death knell. Hiring an outsider has risks but in a long run, it keeps inhouse internal controls dirty laundry to surface. Hiring a CEO with no prior CEO experience has proved a costly mistake. A disaster no less, this brand has destroyed itself.

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