National General Holdings Corp.

On July 27, 2017, The New York Times published an article revealing that the Company and Wells Fargo had forced thousands of customers to pay for auto insurance that they did not need or want. The scheme affected more than 800,000 auto loan customers, pushed more than 274,000 into delinquency, and resulted in more than 20,000 unlawful vehicle repossessions. As a result of this scheme, the Company has been subject to multiple regulatory investigations, congressional scrutiny, and civil lawsuits.

On this news, shares of National General Holdings fell more than 15% between July 26, 2017 and August 10, 2017, when a congressional inquiry into the scandal was launched, thereby injuring investors.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company was perpetrating a massive forced-placed collateral protection insurance (“CPI”) scheme to fraudulently saddle its own customers with unwanted and unneeded automobile insurance policies that it had underwritten; (2) that the Company’s illicit conduct in foisting unwanted and unneeded automobile insurance on its customers had resulted in some of the victims being declared delinquent, suffering adverse impacts to their creditworthiness, and/or having their cars improperly repossessed; (3) that the Company was exposed to an extreme risk of regulatory scrutiny, legal risks, and reputational harm as a result of its participation in the forced-placed CPI scheme; (4) that the Company had failed to maintain effective internal controls over its financial reporting, including by failing to maintain formal documentation sufficient to reasonably ensure the accuracy of internal reporting and accounting procedures across much of its business, including with respect to insurance policy premiums; (5) that the Company’s reported quarterly revenues and policy premiums were in part the product of a fraudulent forced-placed insurance scheme and were therefore artificially inflated and unsustainable; and (6) that the Company had in fact lost substantial business with Wells Fargo because Wells Fargo had terminated the forced-placed CPI scheme after concluding it posed excessive reputational risk and legal exposure.