On December 13, 2018, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit filed against Fanhua, Inc. and certain of its officers.
The class action, filed in United States District Court, Southern District of New York, and index under 18-cv-08183, is on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired Fanhua securities between April 20, 2018 through August 27, 2018, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
Founded in 1998, Fanhua (formerly known as “CNinsure Inc.”) is a leading independent online-to-offline financial services provider. Through its online platforms and offline sales and service network, Fanhua offers a wide variety of life and property and casualty insurance products, and provides insurance claims adjusting services.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Fanhua engaged in improper business practices, including irregular accounting; (ii) the foregoing practices were intended to benefit Company insiders and overstated Fanhua’s financial assets and performance metrics; and (iii) as a result, Fanhua’s public statements were materially false and misleading at all relevant times.
On August 27, 2018, stock analyst Seligman Investments published an article that described Fanhua as a “questionable company” and detailed a history of alleged fraud within the Company, including accounting irregularities in the Company’s second quarter 2018 financial results. The article also described “company insiders” engaging in “self-dealing tactics”, and asserted that Fanhua’s “numerous acquisitions, mostly of other insurance intermediaries . . . are rife with related-party abuses.”
On this news, Fanhua’s ADS price fell $2.75 per share, or 10.52%, to close at $23.40 on August 27, 2018.