In a significant legal move, a shareholder has taken action against the leadership of a major insurance company, alleging serious breaches of fiduciary duty and unjust enrichment. On January 3, 2025, Harry Rosenthal filed a Verified Stockholder Derivative Complaint in the Court of Common Pleas of Delaware County, Pennsylvania, targeting Lincoln National Corporation's current and former officers and directors. The complaint accuses these individuals of making materially false statements and failing to disclose adverse facts about the company's business operations.
The lawsuit claims that since at least November 2020, Lincoln National's leadership made misleading statements about the company's financial health. Specifically, they allegedly failed to disclose a decline in their Variable Universal Life (VUL) insurance business, which led to overstated goodwill and reserves. This resulted in misstated financial results that misled investors about the company's true condition. The complaint highlights an incident on November 2, 2022, when Lincoln National reported a staggering net loss of $2.6 billion for the third quarter of 2022 compared to a net income of $318 million in the same period the previous year. Following this disclosure, Lincoln's stock price plummeted by over 33%.
Rosenthal asserts that these actions constitute breaches of fiduciary duty by Lincoln National's officers and directors. He argues that they failed to act in good faith and did not adequately manage or control the company’s affairs. As part of his complaint, Rosenthal seeks several forms of relief from the court: damages sustained by Lincoln National due to these alleged breaches; restitution from individual defendants; reforms to improve corporate governance; and coverage for legal costs.
Representing Rosenthal are attorneys James M. Ficaro and John J. Gross from The Weiser Law Firm P.C., along with Michael I. Fistel Jr. and Mary Ellen Conner from Johnson Fistel LLP. The case is presided over by judges at the Court of Common Pleas in Delaware County under Case ID No. CV2025000146.