Pomerantz Appointed Lead Counsel in First American Financial Securities Litigation
On January 27, 2021, U.S. District Judge Dale S. Fischer of the Central District of California appointed Pomerantz LLP as Lead Counsel on behalf of Lead Plaintiff St. Lucie County Fire District Firefighters Pension Trust Fund in In re First American Financial Corp. Securities Litigation, 20-cv-9781 (C.D. Cal.), a securities litigation being pursued on behalf of a class of defrauded investors concerning allegations that First American Financial Corp. (“First American” or the “Company”) failed to disclose that they had inadequate cybersecurity protections against data breaches and, as a result, customer data was at risk of being exposed or hacked.
First American is a financial services company that provides title insurance and settlement services to the real estate and mortgage industries.
The complaint alleges that, between February 17, 2017 and October 22, 2020, the defendants failed to disclose that: (i) First American had failed to implement basic security standards to protect its customers’ personal information and data; and (ii) the Company faced a heightened risk of cybersecurity failures as a result of its automation and efficiency initiatives.
On February 17, 2017, First American filed its annual report with the U.S. Securities and Exchange Commission (the “SEC”) in which it made clear to investors that First American understood its information and data services were a key component of the Company’s success, stating that they were “strengthening our enterprise through data and process advantages.”
The truth emerged on May 24, 2019, when KrebsOnSecurity, a cybersecurity blog, reported that First American had “leaked hundreds of millions of documents related to mortgage deals going back to 2003,” exposing personal customer information including bank account numbers, tax records and Social Security numbers. On this news, First American’s share price fell $3.46 per share, or 6.2%, to close at $51.80 per share on May 25, 2019.
Then, on October 22, 2020, First American filed its quarterly report with the SEC in which it revealed that it had received a Wells Notice (notification from the SEC that it is planning to bring an enforcement action) in September 2020 resulting from two investigations, one by the SEC and the other by the New York Department of Financial Services, relating to the security breach reported by KrebsOnSecurity. Both investigations examined the adequacy of the Company’s disclosure controls. On this news, First American’s share price fell a further $4.83 per share, or 9.3%, to close at $46.75 per share on October 22, 2020.