Stockholders at Triad Guaranty Inc., file class action lawsuit against company execs.
West Palm Beach, FL (JusticeNewsFlash.com)–Stockholders for Triad Guaranty Inc., a private mortgage insurance company located in Winston-Salem, North Carolina, sued former and current company executives in a class action lawsuit last week. The lawsuit, filed in the U.S. District Court for the Middle District of North Carolina, alleges the company issued false, overinflated financials in quarterly earnings and other financial statements to its stockholders. The lawyers for the insurance company’s shareholders were led to believe in a false corporate worth leading stockholders to buy Triad’s common stock at artificially inflated prices reported the Winston-Salem Journal on Friday.
The documents filed in court claim Triad executives failed to disclose Triad’s lost reserves which is a violation of generally accepted accounting principles (GAAP). These intentional financial omissions, by the insurance company’s executives, led shareholders to believe in the overinflated company’s stock prices and buy shares at the artificial price.
Triad was slammed in the aftermath of the overinflated real-estate market by mass delinquencies and foreclosures in key states like California, Florida, Nevada and Georgia. The plaintiffs’ legal teams are also accusing Triad of using improper underwriting practices for private mortgage insurance (PMI) policies written in 2006 and 2007. This includes PMI policies written on Alt-A, pay-option and adjustable rate mortgage policies.
Triad has eliminated 40% of its work force and discontinued writing new mortgage insurance policies on July 15, 2008. The company is running off its business which means it will exist until profits from existing policies until they expire.
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