AmTrust Top Executives Under Investigation Amid SEC Probe
Schubert Jonckheer & Kolbe LLP is investigating potential claims on behalf of shareholders of AmTrust Financial Services, Inc. (NASDAQ: AFSI) (“AmTrust”) related to errors in the company’s financial statements and an ongoing government probe into AmTrust’s suspect accounting practices.
On April 11, 2017, The Wall Street Journal revealed that an auditor at AmTrust’s former accounting firm, BDO USA LLP, secretly recorded internal conversations in 2014 regarding AmTrust on behalf of the FBI and in cooperation with the SEC as a whistleblower. The recordings were part of a continuing federal investigation into the company’s accounting practices. A separate examination by the New York Department of Financial Services, a leading state regulator, is also reportedly underway. On this news, AmTrust shares fell $3.57 (or approximately 19%), to close at $15.30.
These revelations occurred in the wake of several AmTrust announcements regarding the integrity of its financial reporting practices. On February 27, 2017, AmTrust announced that it would take an unexpected $65 million reserve charge, that it had identified a material weakness in its internal control over financial reporting that existed as of December 31, 2016, and that it expected to correct errors in its financial statements for fiscal years ended December 31, 2015 and 2014. Then, on April 3, 2017, AmTrust filed its delayed Form 10-K for the year ended December 31, 2016, including restated financial statements and related disclosures for 2014 and 2015. The restatements primarily involve the timing of recognition of revenue in the company’s service and fee business. The total impact of the restatements to net income attributable to common stockholders in 2014 and 2015 was a decline of 7.2% and 11.2%, respectively.
AmTrust’s stock price has plummeted in recent months following these events, falling $12.36 (or approximately 45%) since the market closed on February 24, 2017.
Our investigation concerns whether AmTrust’s officers and directors breached their fiduciary duties by making false and misleading statements to shareholders and the market or engaged in other accounting misconduct. These executives may have also exposed the company to significant civil liability, as AmTrust currently faces class action lawsuits involving these events.
If you currently own stock in AmTrust Financial Services and wish to obtain additional information about our investigation and your legal rights, please complete the form below or contact Dustin Schubert at dschubert@sjk.law or 415.788.4220.
