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.
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.