AmTrust Investors’ Suit Over Accounting Issues Partially Revived

AmTrust Financial Services Inc. investors got their suit partially reinstated by a panel of Second Circuit judges, who ruled to vacate and remand certain claims that the company, its officers, directors, and underwriters misled them about accounting problems.

Investors plausibly alleged that the financial services company’s warranty contracts and bonuses were misstated, the appeal panel said in its ruling. Claims against former auditor BDO were not reinstated, the judges said in the opinion filed Wednesday.

AmTrust promotes and markets extended warranties, but the company allegedly accounted for a portion of that revenue stream by recognizing future administration services up front, ...