Atlas Financial Securities Litigation

A class action complaint was filed in the Court on March 5, 2018, styled Fryman v. Atlas Financial Holdings, Inc., et al., No. 1:18-cv-01640.

By Order dated May 15, 2018, the Court appointed Lead Plaintiffs and approved their selection of Glancy Prongay & Murray LLP as Lead Counsel and Lawrence Kamin, LLC as Liaison Counsel.

On July 30, 2018, Lead Plaintiffs filed and served their Amended Class Action Complaint for Violations of the Federal Securities Laws (the "First Amended Complaint") asserting claims against all Defendants under Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, and against the Individual Defendants under Section 20(a) of the Exchange Act. Among other things, the First Amended Complaint alleged that Defendants made materially false and misleading statements about Atlas's loss reserves that caused the prices of Atlas's publicly traded securities to be artificially inflated.

On September 28, 2018, Defendants moved to dismiss the First Amended Complaint, which Lead Plaintiffs opposed in subsequent filings.

On April 1, 2019, before the Court issued any ruling on Defendants' motion to dismiss the First Amended Complaint, Lead Plaintiffs filed and served their unopposed motion for leave to file a second amended complaint. On April 9, 2019, Lead Plaintiffs filed and served their Second Amended Class Action Complaint for Violations of the Federal Securities Laws (the "Second Amended Complaint"), asserting claims under the Exchange Act against Defendants based upon allegations similar to those in the First Amended Complaint, but also included allegations relating to additional loss reserve insufficiencies subsequent to those alleged in the First Amended Complaint.

On June 4, 2019, before Defendants answered or responded to the Second Amended Complaint, Lead Plaintiffs filed and served their unopposed motion for leave to file a third amended complaint. On June 11, 2019, Lead Plaintiffs filed and served their Third Amended Class Action Complaint for Violations of the Federal Securities Laws (the "Third Amended Complaint"), asserting claims under the Exchange Act against Defendants based upon allegations similar to those in the First and Second Amended Complaints, but also included allegations relating to additional loss reserve insufficiencies subsequent to those alleged in the First and Second Amended Complaints.

On July 17, 2019, Defendants moved to dismiss the Third Amended Complaint, which Lead Plaintiffs opposed in subsequent filings. On May 26, 2020, the Court entered an Order granting Defendants' motion to dismiss the Third Amended Complaint, with leave to amend.

On June 30, 2020, Lead Plaintiffs filed and served their Fourth Amended Class Action Complaint for Violations of the Federal Securities Laws (the "Complaint"), asserting claims under the Exchange Act against Defendants based upon allegations similar to those in the First, Second, and Third Amended Complaints, but also including additional allegations relating to alleged loss reserve insufficiencies.

On August 17, 2020, Defendants moved to dismiss the Complaint, which Lead Plaintiffs opposed in subsequent filings.

On April 18, 2022, the Court entered an Order granting in part and denying in part Defendants' motion to dismiss the Fourth Amended Complaint. On May 9, 2022, Defendants filed and served their answer to the Complaint.

From June to September 2022, the Parties engaged in fact discovery.

While discovery was ongoing, the Parties agreed to mediate. On September 21, 2022, Lead Counsel and Defendants' Counsel participated in a full-day mediation session before Jed Melnick, Esq. of JAMS ADR. The session ended without any agreement being reached.

Mr. Melnick conducted further discussions with the Parties, which culminated in a mediator's recommendation to resolve the Action for $5,000,000 for the benefit of the Settlement Class, which the Parties accepted.

Based on the investigation, litigation and mediation of the case and Plaintiffs' direct oversight of the prosecution of this matter and with the advice of their counsel, each of the Plaintiffs has agreed to settle and release the claims raised in the Action pursuant to the terms and provisions of the Stipulation, after considering, among other things, (a) the substantial financial benefit that Plaintiffs and the other members of the Settlement Class will receive under the proposed Settlement; and (b) the significant risks and costs of continued litigation and trial.

Defendants are entering into the Stipulation solely to eliminate the uncertainty, burden and expense of further protracted litigation. Each of the Defendants denies any fault, liability, or wrongdoing.

On May 2, 2023, the Court preliminarily approved the Settlement, authorized the Notice to be disseminated to potential Settlement Class Members.

The court held the final fairness hearing on September 9, 2023.

The court granted final approval of the Settlement on September 9, 2023.

Plaintiffs and Lead Counsel believe that the claims asserted against Defendants have merit. They recognize, however, the expense and length of continued proceedings necessary to pursue their claims through trial and appeals, as well as the very substantial risks they would face in establishing liability and damages. For example, Defendants argued and would have continued to argue that based on the opinions of their independent actuaries and predictive analytics, they reasonably believed that Atlas’s reserves were appropriate when set throughout the Settlement Class Period, and that as a result there was no basis to allege that they had any intent to commit, or that they had committed, securities fraud, contrary to Plaintiffs’ allegations. Additionally, Plaintiffs would have to prevail at several stages—class certification, motions for summary judgment, and trial—and if they prevailed on those, on the appeals that would likely have followed. Thus, there were very significant risks attendant to the continued prosecution of the Action.

In light of these risks, the amount of the Settlement and the immediacy of recovery to the Settlement Class, Plaintiffs and Lead Counsel believe that the proposed Settlement is fair, reasonable, and adequate, and in the best interests of the Settlement Class. Plaintiffs and Lead Counsel believe that the Settlement provides a substantial benefit to the Settlement Class, namely $5,000,000 in cash (less the various deductions described in the Notice), as compared to the risk that the claims in the Action would produce a smaller or no recovery after summary judgment, trial, and appeals, possibly years in the future.

Defendants have denied the claims asserted against them in the Action and deny having engaged in any wrongdoing or violation of law of any kind whatsoever. Defendants have agreed to the Settlement solely to eliminate the burden and expense of continued litigation. Accordingly, the Settlement may not be construed as an admission of any wrongdoing by Defendants.

If there were no Settlement and Plaintiffs failed to establish any essential legal or factual element of their claims against Defendants, neither Plaintiffs nor the other members of the Settlement Class would recover anything from Defendants. Also, if Defendants were successful in proving any of their defenses, either at summary judgment, at trial, or on appeal, the Settlement Class could recover substantially less than the amount provided in the Settlement, or nothing at all.

If you are a member of the Settlement Class, you are subject to the Settlement, unless you timely request to be excluded. The Settlement Class consists of:

All persons who and entities that purchased or otherwise acquired Atlas Common Stock, and/or Atlas Notes, and/or Atlas Call Options, and/or wrote Atlas Put Options, during the period from February 22, 2017, through April 30, 2019, inclusive, and were damaged thereby.

Excluded from the Settlement Class are: (i) Defendants; (ii) any person who served as an executive officer or director of Atlas during the Settlement Class Period and members of their Immediate Families; (iii) present and former parents, subsidiaries, affiliates, and predecessors of Atlas; (iv) any trust for which an Individual Defendant is the settlor or that is for the benefit of an Individual Defendant or member(s) of that person’s Immediate Family; and (v) the legal representatives, affiliates, heirs, successors, and assigns of any person or entity excluded under provisions (i) through (iv) hereof. Also excluded from the Settlement Class are any persons or entities that exclude themselves by submitting a request for exclusion in accordance with the requirements set forth in the Notice. See FAQ 9 below.

PLEASE NOTE: RECEIPT OF THE NOTICE DOES NOT MEAN THAT YOU ARE A SETTLEMENT CLASS MEMBER OR THAT YOU WILL BE ENTITLED TO RECEIVE PROCEEDS FROM THE SETTLEMENT. IF YOU ARE A SETTLEMENT CLASS MEMBER AND YOU WISH TO BE ELIGIBLE TO PARTICIPATE IN THE DISTRIBUTION OF PROCEEDS FROM THE SETTLEMENT, YOU ARE REQUIRED TO SUBMIT THE CLAIM FORM THAT IS BEING DISTRIBUTED WITH THE NOTICE AND THE REQUIRED SUPPORTING DOCUMENTATION AS SET FORTH THEREIN POSTMARKED NO LATER THAN OCTOBER 10, 2023.

At this time, it is not possible to make any determination as to how much any individual Settlement Class Member may receive from the Settlement.

Pursuant to the Settlement, Atlas has agreed to pay or cause to be paid five million dollars ($5,000,000) in cash. The Settlement Amount will be deposited into an escrow account. The Settlement Amount plus any interest earned thereon is referred to as the “Settlement Fund.” If the Settlement is approved by the Court and the Effective Date occurs, the “Net Settlement Fund” (that is, the Settlement Fund less (a) all federal, state and/or local taxes on any income earned by the Settlement Fund and the reasonable costs incurred in connection with determining the amount of and paying taxes owed by the Settlement Fund (including reasonable expenses of tax attorneys and accountants); (b) the costs and expenses incurred in connection with providing notice to Settlement Class Members and administering the Settlement on behalf of Settlement Class Members; and (c) any attorneys’ fees and Litigation Expenses awarded by the Court) will be distributed to Settlement Class Members who submit valid Claim Forms, in accordance with the proposed Plan of Allocation or such other plan of allocation as the Court may approve.

The Net Settlement Fund will not be distributed unless and until the Court has approved the Settlement and a plan of allocation, and the time for any petition for rehearing, appeal or review has expired.

Neither Atlas nor any other person or entity that paid any portion of the Settlement Amount on its behalf are entitled to get back any portion of the Settlement Fund once the Court’s order or judgment approving the Settlement becomes Final. Defendants shall not have any liability, obligation, or responsibility for the administration of the Settlement, the disbursement of the Net Settlement Fund, or any Court-approved plan of allocation.

Approval of the Settlement is independent from approval of a plan of allocation. Any determination with respect to a plan of allocation will not affect the Settlement, if approved.

Unless the Court otherwise orders, any Settlement Class Member who fails to submit a Claim Form postmarked on or before October 10, 2023, shall be fully and forever barred from receiving payments pursuant to the Settlement but will in all other respects remain a Settlement Class Member and be subject to the provisions of the Stipulation, including the terms of any Judgment entered and the releases given. This means that each Settlement Class Member who or that has not submitted a timely request for exclusion that is accepted by the Court (see FAQ 9) releases the Released Plaintiffs’ Claims (as defined in ¶ 36, above) against Defendants’ Releasees (as defined FAQ 6) and will be enjoined and prohibited from filing, prosecuting, or pursuing any of the Released Plaintiffs’ Claims against any of Defendants’ Releasees, whether or not such Settlement Class Member submits a Claim Form.

Participants in and beneficiaries of a plan covered by ERISA (“ERISA Plan”) should NOT include any information relating to their transactions in Atlas Securities held through the ERISA Plan in any Claim Form that they may submit in this Action. They should include ONLY those shares or notes that they purchased or acquired outside of the ERISA Plan. Claims based on any ERISA Plan’s purchases or acquisitions of Atlas Securities during the Settlement Class Period may be made by the plan’s trustees. To the extent any of the Defendants or any of the other persons or entities excluded from the Settlement Class are participants in the ERISA Plan, such persons or entities shall not receive, either directly or indirectly, any portion of the recovery that may be obtained from the Settlement by the ERISA Plan.

The Court has reserved jurisdiction to allow, disallow, or adjust on equitable grounds the Claim of any Settlement Class Member.

Each Claimant shall be deemed to have submitted to the jurisdiction of the Court with respect to his, her or its Claim Form.

Only Settlement Class Members will be eligible to share in the distribution of the Net Settlement Fund. Persons and entities that are excluded from the Settlement Class by definition or exclude themselves from the Settlement Class pursuant to request will not be eligible to receive a distribution from the Net Settlement Fund and should not submit Claim Forms. The only securities that are included in the Settlement are Atlas Securities.

To be eligible for a payment from the proceeds of the Settlement, you must be a member of the Settlement Class and you must have timely completed and return the Claim Form with adequate supporting documentation online or postmarked no later than October 10, 2023. A Claim Form is included with the Notice, or you may obtain one here.

If you are a Settlement Class Member and you do not exclude yourself from the Settlement Class, you will be bound by any orders issued by the Court. If the Settlement is approved, the Court will enter a judgment (the “Judgment”). The Judgment will dismiss with prejudice the claims against Defendants and will provide that, upon the Effective Date of the Settlement, Plaintiffs and each of the other members of the Settlement Class, on behalf of themselves, and their respective heirs, predecessors, successors, assigns, executors, administrators, representatives, attorneys, and agents, in their capacities as such, shall be deemed to have, and by operation of law and of the judgment shall have, fully, finally, and forever compromised, settled, released, resolved, relinquished, waived, and discharged each and every Released Plaintiffs’ Claim (as defined in the Settlement Agreement) against the Defendants and the other Defendants’ Releasees (as defined below), and shall forever be barred and enjoined from prosecuting any or all of the Released Plaintiffs’ Claims against any of the Defendants’ Releasees.

“Defendants’ Releasees” means Defendants, the members of their respective Immediate Families (for individuals), and their respective past, present and future direct and indirect parent entities, subsidiaries, affiliates, general partners, limited partners, principals, shareholders, investors (however denominated), joint ventures, officers, directors, managers, managing directors, employees, contractors, consultants, auditors, accountants, financial advisors, investment bankers, insurers, reinsurers, trustees, trustors, agents, attorneys, predecessors, successors, assigns, heirs, executors, administrators, and any controlling person thereof, all in their capacities as such.

“Unknown Claims” means any Released Plaintiffs’ Claims that Plaintiffs or any other member of the Settlement Class does not know or suspect to exist in his, her, or its favor at the time of the release of such claims, and any Released Defendants’ Claims that any Defendant or any other Defendants’ Releasee does not know or suspect to exist in his, her, or its favor at the time of the release of such claims, that, if known by him, her, or it, might have affected his, her, or its decision(s) with respect to the Settlement. With respect to any and all Released Claims, the Parties stipulate and agree that, upon the Effective Date of the Settlement, Plaintiffs and Defendants shall expressly waive, and each of the other members of the Settlement Class and each of the other Defendants’ Releasees shall be deemed to have waived, and by operation of the Judgment (or the Alternate Judgment, if applicable) shall have expressly waived, any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law or foreign law, that is similar, comparable, or equivalent to California Civil Code § 1542, which provides:

A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

Plaintiffs and Defendants acknowledge, and each of the other Settlement Class Members and each of the other Defendants’ Releasees shall be deemed by operation of law to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the Settlement.

“Released Defendants’ Claims” means all claims and causes of action of every nature and description, whether known claims or Unknown Claims, whether arising under federal, state, common, or foreign law, that arise out of or relate in any way to the institution, prosecution, or settlement of the claims asserted in the Action. Released Defendants’ Claims do not include: (i) any claims relating to the enforcement of the Settlement; and (ii) any claims against any person or entity that submits a request for exclusion from the Settlement Class that is accepted by the Court.

“Plaintiffs’ Releasees” means Plaintiffs, all other plaintiffs in the Action, and all other members of the Settlement Class, and the members of each of their respective Immediate Families (for individuals), and their respective past, present and future direct and indirect parent entities, subsidiaries, affiliates, general partners, limited partners, principals, shareholders, investors (however denominated), joint ventures, officers, directors, managers, managing directors, employees, contractors, consultants, auditors, accountants, financial advisors, investment bankers, insurers, reinsurers, trustees, trustors, agents, attorneys, predecessors, successors, assigns, heirs, executors, administrators, and any controlling person thereof, all in their capacities as such.

Objecting is simply telling the Court that you do not like something about the proposed Settlement, the Plan of Allocation, or the Fee and Expense Award. You can object only if you stay in the Settlement Class. Excluding yourself is telling the Court that you do not want to be part of the Settlement Class.

Any Settlement Class Member who or that does not request exclusion may object to the Settlement, the proposed Plan of Allocation, or Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation Expenses. Objections must be in writing. You must file any written objection, together with copies of all other papers and briefs supporting the objection, with the Clerk’s Office at the United States District Court for the Northern District of Illinois at the address set forth below on or before August 16, 2023. You must also serve the papers on Lead Counsel and on Defendants’ Counsel at the addresses set forth below so that the papers are received on or before August 16, 2023.

Any objection (a) must state the name, address, and telephone number of the person or entity objecting and must be signed by the objector; (b) must contain a statement of the Settlement Class Member’s objection or objections, and the specific reasons for each objection, including any legal and evidentiary support the Settlement Class Member wishes to bring to the Court’s attention; and (c) must include documents sufficient to prove membership in the Settlement Class, including the number of shares of Atlas common stock, Atlas Notes, Atlas Call Options, and/or Atlas Put Options that the objecting Settlement Class Member purchased/acquired and/or sold during the Settlement Class Period (i.e., between February 22, 2017, through April 30, 2019, inclusive), as well as the dates and prices of each such purchase/acquisition and sale. You may not object to the Settlement, the Plan of Allocation, or Lead Counsel’s motion for attorneys’ fees and reimbursement of Litigation Expenses if you exclude yourself from the Settlement Class or if you are not a member of the Settlement Class.

You may file a written objection without having to appear at the Settlement Hearing. You may not, however, appear at the Settlement Hearing to present your objection unless you first file and serve a written objection in accordance with the procedures described above, unless the Court orders otherwise.

The deadline to submit a request for exclusion from the Settlement Class passed on August 16, 2023.

If you ask to be excluded from the Settlement Class, you will not be eligible to receive any payment out of the Net Settlement Fund.

Lead Plaintiffs and the Settlement Class are represented by Kara M. Wolke, Esq. of Glancy Prongay & Murray LLP, 1925 Century Park East, Suite 2100, Los Angeles, CA 90067, 1-888-773-9224, settlements@glancylaw.com.

The Settlement Hearing was held on September 6, 2023, at 10:00 a.m., before the Honorable Franklin U. Valderrama, District Court Judge for the United States District Court for the Northern District of Illinois. The Court has approved the Settlement, the Plan of Allocation, Lead Counsel’s motion for an award of attorneys’ fees and reimbursement of Litigation Expenses.

The Settlement Hearing was held on September 6, 2023, at 10:00 a.m.

Settlement Class Members do not need to attend the Settlement Hearing. The Court considered any submission made in accordance with the provisions even if a Settlement Class Member did not attend the hearing. You can participate in the Settlement without attending the Settlement Hearing.

This website contains only a summary of the terms of the proposed Settlement. For more detailed information about the matters involved in this Action, you are referred to the papers on file in the Action, including the Stipulation, which may be inspected during regular office hours at the Office of the Clerk, United States District Court for the Northern District of Illinois, Everett McKinley Dirksen United States Courthouse, 219 S. Dearborn Street, Chicago, IL 60604. Additionally, copies of the Stipulation and any related orders entered by the Court will be posted on the Documents page of this website.

All inquiries concerning the Notice and the Claim Form should be directed to:

DO NOT CALL OR WRITE THE COURT, THE OFFICE OF THE CLERK OF THE COURT, DEFENDANTS OR THEIR COUNSEL REGARDING THE NOTICE.