NEW YORK, April 11 /PRNewswire/ -- Wolf Haldenstein Adler Freeman &
Herz LLP filed today a class action lawsuit in the United States District
Court, Southern District of New York, on behalf of all persons who
purchased the debt securities (defined below) of Fairfax Financial
Holdings, Ltd. ("Fairfax" or the "Company") (NYSE: FFH) or (TSX: FFH.SV)
between March 24, 2004 and March 21, 2006, inclusive (the "Class Period"),
against defendants Fairfax and V. Prem Watsa, the Company's Chairman and
CEO, alleging violations under the Securities Exchange Act of 1934 (the
"Exchange Act"), 15 U.S.C. sections 78j(b) and 78t(a) and Rule 10b-5,
promulgated thereunder, 17 C.F.R. sections 240.10b-5 (the "Class").
The debt securities at issue in this Complaint are:
7.75% notes maturing 04/26/12 ("7.75% Notes");
8.25% notes maturing 10/01/15;
6.875% notes maturing 4/15/08;
8.3% notes maturing 4/15/26; and
7.375% notes maturing 4/15/18
The Complaint also alleges claims on behalf of a sub-class of Class
members who also suffered damages upon purchasing the 7.75% Notes pursuant
to or traceable to the Company's August 24, 2004 prospectus ("Prospectus")
filed by Fairfax with the SEC on August 25, 2004 to effectuate a $95
million aggregate principal amount debt flotation (the "Sub-Class").
The Complaint alleges that statements in the Prospectus omitted
material information including, inter alia, (1) failure to detail the
Company's increasing liquidity problems; (2) failure to detail second
quarter 2004 transactions between Odyssey and Fairfax and to explain that
the arrangements were structured to avoid a liquidity squeeze at Fairfax
that would have occurred during the quarter; (3) failure to detail
Fairfax's exposure stemming from the need to collateralize run-off
business; (4) failure to detail the Company's reserves and whether they
were adequate to address the Company's growing run-off operations; (5)
failure to detail the Company's growing exposure to finite reinsurance
agreements within the overall organization; and (6) failure to detail
Fairfax's highly leveraged balance sheet and further omissions concerning
the Company's equity position. The claims brought with respect to the
Prospectus seek to pursue remedies under the Securities Act of 1933 (the
"Securities Act") 15 U.S.C. sections 77k and 77l.
Defendants, with respect to the claims brought under the Securities Act
are Mr. Watsa, the Company, and Trevor Ambridge, the Company's CFO and Vice
President (Principal Financial Officer), M. Jane Williamson, the Company's
Vice President (Principal Accounting Officer), Anthony F. Griffiths, a
Director of the Company, Robbert Hartog, a Director of the Company, Bradley
P. Martin, Vice President and Corporate Secretary to the Company, and Banc
of America Securities LLC, the underwriter of the Company's 7.75% Notes.
The Complaint's Exchange Act averments allege that defendants Watsa and
the Company violated the federal securities laws by issuing materially
false and misleading statements throughout the Class Period that had the
effect of artificially inflating the market price of the Company's debt
During the Class Period, the Complaint alleges the Company and Mr.
Watsa engaged in conduct designed to omit material information from the
public concerning Fairfax's exposure to nontraditional insurance and
reinsurance agreements entered into by the Company and its numerous
subsidiaries and affiliates, including, but not limited to, Odyssey Re
Holdings Corp. ("Odyssey") (NYSE: ORH).
The Company's Class Period financial statements also failed to disclose
that Fairfax's current reserve accounts and those maintained by its
subsidiaries and affiliates were similarly understated. Further, the
Company misrepresented its exposure to the risks associated with Odyssey's
finite reinsurance contracts and that the Company's run-off operations
required material restructuring and additions to reserves.
On March 22, 2006, Fairfax announced that U.S. securities regulators
issued subpoenas to third parties (including the Company's independent
auditor and a shareholder) in an ongoing probe into certain financial
transactions, including nontraditional insurance or reinsurance product
transactions. While it was widely known that the SEC was investigating the
U.S. reinsurance industry, this was the first time that the depth of the
investigation was disclosed. The Company's debt securities declined
following this disclosure.
On March 31, 2006, Fairfax filed its delayed annual report on Form
40-F. The annual report stated that the Company would not have to restate
prior period's earnings even though Odyssey would restate the period ended
September 30, 2005 due to an additional contract that needed adjustment.
As a result of the dissemination of the false and misleading statements
set forth above, the market price of Fairfax securities, including its
publicly traded debt, was artificially inflated during the Class Period. In
ignorance of the false and misleading nature of the statements described
above, and the deceptive and manipulative devices and contrivances employed
by said defendants, plaintiffs and the other members of the Class relied,
to their detriment, on the integrity of the market price of the stock in
purchasing Fairfax securities. Had plaintiffs and the other members of the
Class known the truth, they would not have purchased said shares, or would
not have purchased them at the inflated prices that were paid.
The case name is styled Parks v. Fairfax Financial Holdings, Ltd., et
al., 06 cv 2820. A copy of the complaint filed in this action is available
from the Court, or can be viewed on the Wolf Haldenstein Adler Freeman &
Herz LLP website at http://www.whafh.com.
If you purchased Fairfax's debt securities during the Class Period or
the 7-3/4% Notes pursuant to the Prospectus, you may request that the Court
appoint you as lead plaintiff by June 12, 2006.
A lead plaintiff is a representative party that acts on behalf of other
class members in directing the litigation. In order to be appointed lead
plaintiff, the Court must determine that the class member's claim is
typical of the claims of other class members, and that the class member
will adequately represent the class. Under certain circumstances, one or
more class members may together serve as "lead plaintiff." Your ability to
share in any recovery is not, however, affected by the decision whether or
not to serve as a lead plaintiff. You may retain Wolf Haldenstein, or other
counsel of your choice, to serve as your counsel in this action.
Wolf Haldenstein has extensive experience in the prosecution of
securities class actions and derivative litigation in state and federal
trial and appellate courts across the country. The firm has approximately
60 attorneys in various practice areas; and offices in Chicago, New York
City, San Diego, and West Palm Beach. The reputation and expertise of this
firm in shareholder and other class litigation has been repeatedly
recognized by the courts, which have appointed it to major positions in
complex securities multi-district and consolidated litigation.
If you wish to discuss this action or have any questions, please
contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue,
New York, New York 10016, by telephone at (800) 575-0735 (Gregory M.
Nespole, Esq., Gustavo Bruckner, Esq., Paulette S. Fox, Esq., Rachel
Poplock, Esq., or Derek Behnke), via e-mail at email@example.com or
visit our website at http://www.whafh.com. All e-mail correspondence should
make reference to Fairfax.
SOURCE Wolf Haldenstein Adler Freeman & Herz LLP