Cambridge Retirement System v. DeCarlo

Updated: June 12, 2017
Status: Ongoing Case

We filed a derivative complaint in the Delaware Court of Chancery relating to certain transactions involving AmTrust Financial Services, Inc. and its controlling shareholders, the Karfunkel Family. In the fall of 2013, AmTrust was negotiating to acquire distressed insurance company Tower Group International, Ltd. In December 2013, however, AmTrust withdrew its proposal and submitted an offer for Tower on behalf a separate, private entity controlled by the Karfunkel Family. The Karfunkel Family then sold certain of Tower’s valuable assets to yet another entity they controlled, National General Holdings Corp. They also sold certain less valuable assets of Tower back to AmTrust.

Our complaint alleges that the Karfunkel Family—which owes fiduciary duties to AmTrust and its stockholders by virtue of their status as controlling shareholders—wrongfully took a corporate opportunity from AmTrust and otherwise breached their fiduciary duties to the company. The complaint further alleges that the AmTrust board breached its fiduciary duties by acting to advance the interests of the Karfunkel Family, rather than the interests of AmTrust and its minority stockholders. As an indication of the strength our claims, eight of nine defendants answered our complaint, rather than moving to dismiss. In June 2016, the court denied the only motion to dismiss filed. Discovery is ongoing.

The case is Cambridge Retirement System v. DeCarlo. The plaintiff is Cambridge Retirement System.