The Southern District of New York granted Amtrust Financial Services’ motion to dismiss after finding that the plaintiff failed to specifically allege misstatements or omissions necessary to prove scienter in claims related to purported misrepresentations of defendant’s consolidated financial statements. Plaintiff claimed that Amtrust’s financial statements fraudulently misrepresented losses associated with insurance policies, the premiums for which had been ceded to a foreign subsidiary. Amtrust’s foreign subsidiary, located in Luxemburg, operated using an equalization reserve, allowing the reinsurer to offset losses by drawing on the fund. Such reserves are not a feature of U.S. reinsurance companies, and the generally accepted accounting principles (“GAAP”) does not address how such withdrawals should be accounted. The court held that the alleged misstatements failed to specifically allege any facts relating to fraud or scienter. The complaint did not contain sufficient facts to support a material violation of the GAAP or the required intent to defraud. The court reiterated the notion that GAAP principles are subject to the discretion of management. Absent specific facts relating to an intent to conceal or defraud, the determination relating to accounting principles alone was held to not be sufficient to maintain an action alleging securities fraud. Harris v. Amtrust Financial Services Inc., Case No. 14-CV-736 (USDC S.D.N.Y. Sept. 29, 2015).