Ryan & Maniskas, announces that it has filed a class action lawsuit has been filed in the United States District Court for the Southern District of New York on behalf of investors who purchased Tower Group International, Ltd. ("Tower" or the "Company") (TWGP) common stock during the period between May 10, 2011 and September 17, 2013, inclusive (the "Class Period").
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and misleading statements and/or failed to disclose that: (a) Defendants were improperly accounting for the Company’s loss reserves, good will and tax accounts; (b) the Defendants lacked the necessary internal controls over financial reporting; (c) consequently, the Company’s financial statements were deficient and misleading at relevant times; and (d) based upon the above, the Defendants lacked a reasonable basis for their positive statements about the Company during the Class Period.
On August 7, 2013, Tower announced that the Company was postponing its release of its financial results for the second quarter of 2013. The Company stated that its management concluded that "additional time [was] needed to review matters relating to the estimate of its loss reserves and, primarily due to the integration of the Canopius merger, its allocation of goodwill and certain tax accounts." On August 8, 2013, the Company announced guidance with respect to its second quarter 2013 financial results. The Company retained an independent actuarial firm to review selected areas of Tower’s loss reserves as of June 30, 2013. The information included how the Company could potentially record adverse reverse development of $60 million to $110 million pre-tax.
Following this news, the price of Tower’s shares plummeted $5.20 per share, or more than 24%, to a closing price of $16.41 per share on August 8, 2013.
On September 17, 2013, Tower announced that it planned to release its second quarter 2013 financial results during the week of October 7, 2013. Tower reaffirmed that it was not providing and did not expect to provide any information with respect to its results for the second quarter, including the amount of any adjustments for its estimates of loss reserves and amounts of goodwill, until it releases its earnings for the second quarter during the week of October 7, 2013.
Based on this news, the Company’s stock price dropped from a close of $13.86 on September 17, 2013, to a close of $9.99 per share on September 18, 2013 — a decline of $3.875 per share or almost 28%, on unusually high trading volume. The stock has continued to decrease, as investors continue to digest this disheartening news. On September 20, 2013 the Company’s stock price closed at $9.14 per share and on September 23, 2013 at $8.63 per share.