Manulife faces class action in New York

A class action suit has been filed in the U.S. against Manulife, alleging the Canadian insurance giant made false and misleading statements regarding its risk management regime.

The suit follows the announcement on June 19 that the Ontario Securities Commission had commenced an enforcement probe into whether the company had adequately met its continuous disclosure obligations relating to the risks posed by its Income Plus variable annuity product.

The suit charges that Manulife had built up an excessive stock portfolio without adequately hedging its positions against a market downturn.

“We believe strongly that we’ve satisfied all of the applicable disclosure requirements,” says David Paterson, senior vice-president, public affairs, Manulife Financial.

He stressed that the issue relates only to issues of disclosure to shareholders, and that “has nothing to do with our [product] policies. There has never been a moment when any Manulife policyholder has had any reason to be anything other than confident in our ability to deliver.”

The suit was filed on behalf of shareholders by New York-based Abbey Spanier Rodd & Abrams, LLP, a firm which is built on securities fraud cases.

(07/10/09)