A class action lawsuit has been filed in the United States District Court for the Eastern District of Tennessee on behalf of purchasers of UnumProvident Corporation securities during the period between May 7, 2001 and Feb. 4, 2003, inclusive (the “Class Period”).
The complaint charges UnumProvident and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
UnumProvident provides group disability and special risk insurance, as well as group life insurance, long-term care insurance, and payroll-deducted voluntary benefits offered to employees at their worksites. UnumProvident operates around the World. The complaint alleges that during the Class Period, defendants caused UnumProvident’s shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. The company failed to properly record the impairment to its investments and operated “long-term denial factories,” causing the company’s financial results to be inflated. As a result, the company’s shares traded at inflated prices enabling UnumProvident to raise proceeds of $250 million on June 13, 2002 in its bond offering.
The lawsuit alleges that UnumProvident and its top officers inflated the prices of the company’s securities in order to pursue an accelerated securities sale program. Defendants knew that by concealing UnumProvident’s true financial results they could foster the perception in the business community that UnumProvident was a “growth company,” i.e., it was the only way UnumProvident could post the revenue and earnings per share growth claimed by defendants. On Feb. 5, 2003, UnumProvident announced that it had recorded investment losses of $93 million and also reported that it was responding to Securities and Exchange Commission requests for information relating to its investment disclosures.
No class has yet been certified in this action, and until a class is certified an investor is not represented.
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