Wolf Haldenstein Adler Freeman & Herz LLP Commences Class Action Lawsuit on Behalf of Investors in Fairfax Financial Holdings, Ltd. Debt Securities

Apr 11, 2006, 01:00 ET from Wolf Haldenstein Adler Freeman & Herz LLP

    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 classmember@whafh.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