AmTrust and its former CFO settle SEC charges for $10.5 million

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The Securities and Exchange Commission (SEC) announced that AmTrust Financial Services Inc. and its former CFO Ronald E. Pipoly Jr. agreed to pay a combined $10.5 million to settle its lawsuit against them.

The SEC sued AmTrust and Pipoly for allegedly failing to properly disclose material facts related to its process of estimating of insurance losses and reserves.

AmTrust Financial, LLC is a New York-based insurance company that focuses on providing insurance for small businesses. Pipoly was named CFO in 2005 and was replaced as CFO in 2017 by Adam Karkowsky, now President of AmTrust.

Complaint against AmTrust and its former CFO

The Commission alleged that between March, 2010, and February, 2016, the defendants “failed to disclose the Company’s process for reporting management’s best estimate of
loss reserves — a process performed by Pipoly.”

Pipoly failed to reveal that he made consolidating adjustments, which did not consider the actuarial analyses. His accounting adjustments also deviated from AmTrust’s actuarial estimates.