(CN) – A federal appeals court in New York revived a 2004 shareholder class action accusing officers at Hartford Financial Services Group of failing to disclose the kickbacks paid to insurance brokers for steering business their way.
The 2nd Circuit vacated U.S. District Judge Christopher Droney’s dismissal of the case in 2006, remanding on the basis that the case isn’t time-barred. Droney ruled that the defendants “were on constructive notice” of the fraud in July 2001, but failed to sue until 2004, after the two-year statute of limitations.
But the appeals court found that the “bulk of the judicially noticed information was not reasonably accessible to the ordinary investor.”
“Based on a review of the record in this case, we find these arguments sufficiently compelling that the case cannot be decided on a motion to dismiss,” wrote U.S. District Judge Colleen McMahon, who was sitting by designation.
The court expressed no views on the merits of any other grounds for dismissal, because the district court never reached them.
Shareholders accused Hartford Financial officers in 2004 of concealing kickbacks disguised as “contingent commissions.” They claimed the insurance giant’s officers fraudulently concealed kickbacks, bid rigging and price-manipulation schemes between insurers and brokers.
The 2nd Circuit remanded the case for further proceedings.