The Genworth campus off West Broad Street near Glenside Drive. Photo by Michael Schwartz.
The big bosses at locally based Genworth Financial have been slapped with two more lawsuits in recent weeks from angry shareholders.
The lengthy cases, filed in Richmond federal court by Richard Salberg and a Connecticut engineers union, add to two similar suits filed earlier in August. All four similarly allege that about a dozen executives and directors mismanaged the West End company and misled investors about its Australian mortgage unit and long-term care insurance.
As was with the first pair of lawsuits, the defendants in the latest cases are Genworth CEO Thomas McInerney, CFO Martin Klein, directors William Bolinder, G. Kent Conrad, Melina Higgins, Nancy Karch, Christine Mead, David Moffett, Thomas Moloney, James Parke, James Riepe, and former CEO Michael Fraizer.
Fraizer is named as a defendant in all but one of the four suits.
Because of the similarities of the four suits, a federal court judge in Richmond recently agreed to allow them to be consolidated into one.
The Salberg case, a 64-page suit filed Aug. 28, makes claims related to alleged Genworth statements about the health of its Australian market leading up to an IPO of its operations there and deficiencies in the calculations of reserves for claims in its long-term care business.
Read the union suit (PDF)
The union suit, filed Sept. 3 by the International Union of Operating Engineers Local No. 478 Pension Fund, zeroes in specifically on the struggles of Genworth’s long-term care insurance. That line of business particularly has forced the company to set aside hundreds of millions of dollars of reserves in recent years that ate away at the company’s profit and led to huge losses.
Genworth reported a loss of $1.04 billion for the full year 2014, largely fueled by setting aside reserves. Those losses have continued into 2015; Genworth reported a net loss of $193 million in the quarter ending June 30.
The union suit is also going after accounting giant KPMG for its role as Genworth’s outside auditor. It claims malpractice against KPMG for allegedly helping to facilitate “manipulation” of Genworth’s financial statements during the relevant period.
All four cases drill down into statements the executives made during conference calls and investor presentations regarding alleged internal reviews of the LTC business and whether it had adequate reserves to cover claims. The cases claim the executives later contradicted themselves and admitted to problems in the business.
All four cases point to their claims’ relation to the struggling performance of Genworth’s stock, which trades under the symbol GNW. It closed Wednesday at $5.50 per share, up 6.2 percent. That’s down from more than $14 a year ago. The stock peaked at around $36 per share in 2007, just prior to the recession, and has never fully recovered.
The cases all claim breaches of fiduciary duty and seek to win untold damages on behalf of Genworth to be paid by the defendants for their alleged mismanagement. They want restitution from the executives and directors, including forcing them to disgorge the compensation they received during the period in question.
Some of the cases also seek to force Genworth to move toward improving its internal controls.
None of the defendants have filed responses in any of the four cases.
Genworth has said it does not comment on pending litigation. The defendants are all represented by attorney Greg Danilow of New York law firm Weil Gotshal & Manges. Their local counsel is Elizabeth Flannagan Edwards, Brian Pumphrey and Ryan Frei of McGuireWoods.
KPMG is represented by New York law firm Foley & Lardner.
The union is represented by Donald Broggi of New York law firm Scott and Scott. Its local counsel is Richmond law firm Butler Royals. Neither firm returned calls for comment.
Salberg is represented by Michael Fistel Jr. of Johnson & Weaver in Georgia and Jeffrey Geiger of Sands Anderson. Geiger is also representing one of the plaintiffs in one of the earlier cases.
The Genworth campus off West Broad Street near Glenside Drive. Photo by Michael Schwartz.
The big bosses at locally based Genworth Financial have been slapped with two more lawsuits in recent weeks from angry shareholders.
The lengthy cases, filed in Richmond federal court by Richard Salberg and a Connecticut engineers union, add to two similar suits filed earlier in August. All four similarly allege that about a dozen executives and directors mismanaged the West End company and misled investors about its Australian mortgage unit and long-term care insurance.
As was with the first pair of lawsuits, the defendants in the latest cases are Genworth CEO Thomas McInerney, CFO Martin Klein, directors William Bolinder, G. Kent Conrad, Melina Higgins, Nancy Karch, Christine Mead, David Moffett, Thomas Moloney, James Parke, James Riepe, and former CEO Michael Fraizer.
Fraizer is named as a defendant in all but one of the four suits.
Because of the similarities of the four suits, a federal court judge in Richmond recently agreed to allow them to be consolidated into one.
The Salberg case, a 64-page suit filed Aug. 28, makes claims related to alleged Genworth statements about the health of its Australian market leading up to an IPO of its operations there and deficiencies in the calculations of reserves for claims in its long-term care business.
Read the union suit (PDF)
The union suit, filed Sept. 3 by the International Union of Operating Engineers Local No. 478 Pension Fund, zeroes in specifically on the struggles of Genworth’s long-term care insurance. That line of business particularly has forced the company to set aside hundreds of millions of dollars of reserves in recent years that ate away at the company’s profit and led to huge losses.
Genworth reported a loss of $1.04 billion for the full year 2014, largely fueled by setting aside reserves. Those losses have continued into 2015; Genworth reported a net loss of $193 million in the quarter ending June 30.
The union suit is also going after accounting giant KPMG for its role as Genworth’s outside auditor. It claims malpractice against KPMG for allegedly helping to facilitate “manipulation” of Genworth’s financial statements during the relevant period.
All four cases drill down into statements the executives made during conference calls and investor presentations regarding alleged internal reviews of the LTC business and whether it had adequate reserves to cover claims. The cases claim the executives later contradicted themselves and admitted to problems in the business.
All four cases point to their claims’ relation to the struggling performance of Genworth’s stock, which trades under the symbol GNW. It closed Wednesday at $5.50 per share, up 6.2 percent. That’s down from more than $14 a year ago. The stock peaked at around $36 per share in 2007, just prior to the recession, and has never fully recovered.
The cases all claim breaches of fiduciary duty and seek to win untold damages on behalf of Genworth to be paid by the defendants for their alleged mismanagement. They want restitution from the executives and directors, including forcing them to disgorge the compensation they received during the period in question.
Some of the cases also seek to force Genworth to move toward improving its internal controls.
None of the defendants have filed responses in any of the four cases.
Genworth has said it does not comment on pending litigation. The defendants are all represented by attorney Greg Danilow of New York law firm Weil Gotshal & Manges. Their local counsel is Elizabeth Flannagan Edwards, Brian Pumphrey and Ryan Frei of McGuireWoods.
KPMG is represented by New York law firm Foley & Lardner.
The union is represented by Donald Broggi of New York law firm Scott and Scott. Its local counsel is Richmond law firm Butler Royals. Neither firm returned calls for comment.
Salberg is represented by Michael Fistel Jr. of Johnson & Weaver in Georgia and Jeffrey Geiger of Sands Anderson. Geiger is also representing one of the plaintiffs in one of the earlier cases.