CFO.com – One day after filing a $5 billion lawsuit claiming that a group of short-sellers and aggressive hedge funds were scheming to drive down its stock price, Fairfax Financial Holdings announcedthat it will restate its financial results. The announcement caused Fairfax’s stock to fall, and credit-rating agency Standard & Poor’s responded by putting the company on CreditWatch for apossible downgrade.
Officials at the Toronto-based insurance company said “non-cash accounting errors” were discovered dating back to before 2001, according to a press statement. It noted that although the restated amounts have not been finalized, the company estimates that it will decrease shareholders’ equity as of March 31, 2006, by between $175 million and $190 million, or about 5 percent of its year-end shareholders equity.
Fairfax also said it will include corrections of certain unrelated errors “of an immaterial nature” in the restatement.
As CFO.com reported Thursday, Fairfax filed a lawsuit on Wednesday, alleging that a number of prominent and aggressive hedge funds participated in a scheme to manipulate the company’s shares.
Fairfax filed its suit in a New Jersey court against SAC Capital Management and several of its entities, SAC founder Steven A. Cohen, Lone Pine Capital, Rocker Partners, and Third Point LLC and its founder Daniel S. Loeb.
