Securities litigation against life sciences companies
Various year-end securities litigation studies have shown exactly what one might expect, that cases involving financial services companies have dominated securities lawsuit filings for the last few years. What is surprising though is that plaintiffs’ attorneys have continued to pursue claims against companies in other industries, specifically the life sciences.
A recent memo put out by the Dechert law firm takes a look at securities lawsuits that were filed against life sciences companies during 2009. In total, there were nineteen (19) life sciences companies sued in securities class action lawsuits; this represents 10% of all securities suits. Twelve (12) of the nineteen (19) suits were brought against companies with market capitalizations under $250 million. Compared to prior years, a larger number of life sciences lawsuits were focused on allegations of financial improprieties rather than claims of misrepresentations involving industry-specific issues such as product safety or efficacy. Nine (9) cases involved allegations of accounting improprieties, compared to six (6) alleging misrepresentations involving product safety and six (6) involving the prospects for or timing of FDA approval.
It is important to note that this report represents just one year in the history of life sciences litigation. As such, we encourage clients to engage in risk assessment that covers a broader spectrum of time. In addition, we strongly recommend a comprehensive approach to risk management in the area of securities/Directors’ & Officers’ Liability risk exposures.
About the Author
Michael Kearney is an Executive Vice President at WGA and co-leader of the Life Sciences Practice in WGA’s Property and Casualty Group . He specializes in working with life sciences and high technology companies, with a new emphasis on green companies, such as biofuel manufactures and clean technology.