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Class Action

: The PSLRA Nugget

Top Brass

By Christopher S. Jones

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Plaintiffs can declare victory on the motion to dismiss the St. Paul Travelers securities class action, with Judge John R. Tunheim (D. Minn.) holding that ?the facts alleged in the complaint, when taken as a whole, strongly suggest that the company's senior executives were aware that the financial statements issued during the class period were false or misleading when made.?

That?s because ?the complaint alleges that the senior executives were aware that the financial statements neither accurately accounted for nor made sufficient disclosures regarding defendants' alleged participation in bid-rigging or misuse of finite reinsur-ance, and that ?the alleged kickback scheme was so pervasive that the company named it the 'Top Brass' program, underwriters made false or 'B' bids on a regular basis to rig the insurance market, underwriters violated the company's underwriting policies to obtain large group insurance policies through the kickback program, senior executives had access to the Minnesota Department of Commerce Report that opined that the company had repeatedly violated its own underwriting policies, and the alleged misconduct accelerated after Jay Fishman became the CEO of the company.?

You can read In re St. Paul Travelers, issued September 25, 2006, at 2006 U.S. Dist. LEXIS 70261.

Nugget: ?Investors need the complete picture to ensure that optimistic statements about a company's financial condition do not mislead investors."

Full post as published by The PSLRA Nugget on November 13, 2006 (boomark / email).