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Erie Family Life Sued in Class Action Fraud Case

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At a glance:

A class action lawsuit has been filed against Erie Family Life Insurance Company, for securities fraud, on behalf of shareholders.
 
The suit alleges that the company arranged to artificially depress the share price from about $32 per share to about $26, and then masqueraded as a "third party" purchaser who offered to buy back shares of small investors for the original $32. The purpose was to get rid of minority shareholders.
 

Class Action Press Release - Lawsuit filed on behalf of Erie ... -

Lawfuel - 6/20/2006 7:47 PM

June 20, 2006--On June 1, 2006, Johnson Law Firm APC commenced a securities fraud class action lawsuit in the United States District Court for the Western District of Pennsylvania on behalf of those persons and entities who owned the securities of Erie Family Life Insurance Company ("EFL") between March 21, 2004 and March 24, 2006.
 
This lawsuit alleges an effort by Erie Indemnity Company ("Erie Indemnity"), Erie Insurance Exchange ("Erie Exchange") and EFL's board of directors to "freeze out" EFL's minority shareholders at an unreasonably low price. As described in the Complaint, defendants artificially depressed the price of EFL shares to as low as $26.50 per share even though they had traded at above $32 per share for nearly two years. Defendants then announced that a "third-party" purchaser would pay the minority shareholders $32 for their shares. The purchaser was not a "third party" at all, but rather a shell entity owned and controlled by Erie Indemnity and Erie Exchange.
 
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