September 30, 2020 - An amended complaint was filed.

May 5, 2020 - An investor in shares of Hallmark Financial Services, Inc. (NASDAQ: HALL) filed a lawsuit in the U.S. District Court for the Northern District of Texas over alleged violations of Federal Securities Laws by Hallmark Financial Services, Inc. in connection with certain allegedly false and misleading statements made between March 5, 2019 and March 17, 2020.

Dallas, TX based Hallmark Financial Services, Inc., through its subsidiaries, underwrites, markets, distributes, and services property/casualty insurance products to businesses and individuals in the United States.

Hallmark Financial Services, Inc. reported that its annual Total Revenue declined from $385.52 million in 2017 to $379.26 million in 2018, and that its Net Loss of $11.55 million turned to a Net Income of $10.34 million in 2018.

On March 2, 2020, Hallmark Financial Services, Inc. announced that it had decided to exit from its Binding Primary Commercial Auto business and reported a $63.8 million loss development for prior underwriting years.

On March 11, 2020, Hallmark Financial Services, Inc. disclosed that it had dismissed its independent auditor, BDO USA, LLP (“BDO”), due to a disagreement regarding estimates for reserves for unpaid losses, among other things.
On March 17, 2020, Hallmark Financial Services, Inc. filed with the SEC a letter from BDO in which BDO stated “BDO expanded significantly the scope of its audit on January 31, 2020, with respect to which a substantial portion of the requests had not been received and/or tested prior to our termination.”

Shares of Hallmark Financial Services, Inc. (NASDAQ: HALL) declined from $18.94 per share on January 21, 2020, to as low as $2.35 per share on March 16, 2020, respectively $2.80 per share on March 18, 2020.

According to the complaint the plaintiff alleges on behalf of purchasers of Hallmark Financial Services, Inc. (NASDAQ: HALL) common shares between March 5, 2019 and March 17, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between March 5, 2019 and March 17, 2020, the defendants made false and/or misleading statements and/or failed to disclose that the Company lacked effective internal controls over accounting and financial reporting related to reserves for unpaid losses, that the Company improperly accounted for reserve for unpaid losses and loss adjustment expenses related to its Binding Primary Commercial Auto business, that as a result, Hallmark Financial would be forced to report a $63.8 million loss development for prior underwriting years, that as a result, Hallmark Financial would exit from its Binding Primary Commercial Auto business, and that as a result, defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times. According to the suit, these true details were disclosed by a market research firm.