We are investigating Hallmark Financial Services, Inc. (HALL) (“Hallmark Financial” or the “Company”) for potential violations of the federal securities laws.
On March 2, 2020, Hallmark Financial announced its decision to exit from its Binding Primary Commercial Auto business, and reported a $63.8 million loss development for prior underwriting years. On this news, Hallmark’s stock price fell $2.10 per share, or more than 14%, to close at $12.23 per share on March 3, 2020. On March 11, 2020, Hallmark Financial disclosed that it had dismissed its independent auditor, BDO USA, LLP (“BDO”) due to a disagreement regarding estimates for reserves for unpaid losses, among other things. On this news, Hallmark’s stock price fell $2.39 per share, or over 29%, to close at $5.71 per share on March 12, 2020. Then, on March 17, 2020, Hallmark filed with the U.S. Securities and Exchange Commission a letter from BDO in which BDO stated “BDO expanded significantly the scope of its audit on January 31, 2020, with respect to which a substantial portion of the requests had not been received and/or tested prior to our termination.” On this news, Hallmark’s stock price fell an additional $0.08 per share, or 2.5%, to close at $3.12 per share on March 18, 2020.