Class Action Lawsuit News

Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Announces Class Action Lawsuit on Behalf of Investors of Direct General Corporation

"WASHINGTON--(BUSINESS WIRE)--March 8, 2005--The law firm of Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has filed a lawsuit on behalf of its client and on behalf of other similarly situated purchasers of the securities of Direct General Corporation, Inc. (Nasdaq:DRCT) ('Direct General' or the 'Company') from August 11, 2003, through January 26, 2005, inclusive (the 'Class Period'), in the United States District Court for the Middle District of Tennessee.

The complaint charges Direct General and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Direct General is a financial services holding company whose principal operating subsidiaries provide non-standard personal automobile insurance, term life insurance, premium finance and other consumer products and services through neighborhood sales offices staffed primarily by employee-agents.

The complaint alleges that Direct General's financial statements and defendants' disclosures throughout the Class Period regarding the Company's financial statements were materially false and misleading in that Direct General was failing to properly adjust for loss reserves with respect to a change in the law related to personal injury protection coverage in Florida. Beginning with policies issued on or after October 1, 2003, Florida mandated that the maximum personal injury protection coverage deductible be reduced from $2,000 per occurrence to $1,000 and that the limit be increased to $10,000 in excess of the deductible as opposed to $10,000 less the deductible. The Complaint further alleges that as result of this, the Company had to further increase its reserves by approximately $2.2 million, and as a consequence of the foregoing, the Company's income was materially overstated at all relevant times." (Read more here)

posted by Monkeyman @ 10:02 PM