Levi & Korsinsky, LLP will start an investigation into the Ambac Financial Group, Inc. (NASDAQ:AMBC) Board of Directors for possible breaches of fiduciary duties. The announcement was made on May 12. They have also asked to be contacted for additional information about the investigation.
Levi & Korsinsky is not the first to conduct an investigation. Last May 11, Newman Ferrara, LLP has announced that they will also be investigating Ambac. A holding company with headquarters in New York, Ambac has subsidiaries that are involved in providing financial guarantees and various financial services.
The company’s Board of Directors has increasingly been criticized by their shareholders over the past few months. Concerns were raised that despite waning stock prices and the company’s seeming lack of direction, the Board and their CEO, Nader Tavakoli, seem to be excessively compensated for their services. This diminishes shareholder value according to the allegations.
Jeffrey Stein, the current Chairman of the Board, seems to be the center of the issue. He is being criticized for being unable to evaluate and supervise Ambac’s leadership and direction. According to Jeffrey Norton, a Newman Ferrara partner, it is alarming how Ambac’s executive and board are enjoying large compensation packages despite the company’s declining performance. They are also encouraging people to come forward with information to help in the investigation.
On May 11, Ambac announced that they are filing a lawsuit against Puerto Rico Highways and Transportation Authority. The suit is aimed towards halting a ten-year lease extension for the operation of two toll roads in the US territory. The company is also seeking an interim receiver for PRHTA in the suit filed in the US District Court for the District of Puerto Rico.
Ambac’s first quarter earnings of 2016 were reported at $9.4 million. Profit was at $0.21 per share and $4.82 per share for earnings, adjusted for non-recurring costs. Revenue is at $16.9 million. Since the beginning of the year, the company’s shares have risen by 14%. After the May 11 announcement by Newman Ferrara, the company has traded down by -1.17% since closing at $15.38.