NEW YORK, Feb. 1 2005 – LAWFUEL – The Law News Network — Wolf Popper LLP has filed a securities fraud lawsuit against Direct General Corporation (Nasdaq: DRCT) and certain of its officers and directors, on behalf of all persons who purchased Direct
General common stock on the open market from February 10, 2004 through January
26, 2005, inclusive, or pursuant to the March 23, 2004 secondary stock
offering. The action was filed in the U.S. District Court for the Middle
District of Tennessee. The complaint can be obtained from the Court or viewed
on Wolf Popper’s website at http://www.wolfpopper.com.
Plaintiff alleges in the action that, during the Class Period, defendants
materially misrepresented on numerous occasions that Direct General was
performing extremely well, when in fact Direct General had understated its
loss reserves in light of October 1, 2003 Florida legislation that had exposed
the company to increased liability.
Specifically, the Florida statute increased insurers’ exposure to claims
by reducing the minimum allowable deductible from $2,000 per occurrence to
$1,000 and raising the minimum allowable coverage to $10,000 in excess of the
deductible as opposed to $10,000 less the deductible.
Direct General shocked investors when it disclosed on January 26, 2005 —
over 15 months after the passage of the Florida law — that it had not
previously increased its reserves in light of its exposure under Florida law
during previous quarters, and that it would consequently be required to
increase its reserves by $11 million pre-tax.
As a result of the news, Direct General shares plummeted nearly 31% to
close on January 27, 2005 at $19.67 per share.
Wolf Popper LLP has extensive experience representing shareholders in
class actions and has successfully recovered billions of dollars for defrauded
investors and shareholders.
Class members who desire to be appointed a lead plaintiff in this action
must file a motion with the Court no later than April 1, 2005. Class members
who are interested in serving as a lead plaintiff in this action, or other
persons who have questions or information regarding the prosecution of this
action, are urged to call or write:
Robert C. Finkel, Esq.
WOLF POPPER LLP
845 Third Avenue
New York, NY 10022
Telephone: 212.451.9620 or toll free 877.370.7704