Posts Tagged ‘securities litigation’

Last week’s Halliburton webcast: a round-up of our discussion

gavel3Our February 27th webcast received an early morning boost thanks to the Wall Street Journal‘s piece “Securities Class Action: Endangered Species? outlining the potential impact of the Supreme Court’s ruling on the Halliburton case. Securities Class-Actions have been the bane of U.S. publicly held companies since 1988 when the Supreme Court ruling on Basic vs Levinson established the “fraud -on-the- market “ theory which plaintiffs’ securities lawyers quickly exploited for the benefit of their clients, and themselves .

To provide some idea of the overall size and financial impact of the Securities Class-Action cottage industry, consider the following:

  • 3,200 + securities class-actions filed between 1997 and 2013 (Cornerstone Research)
  • $75B + paid to settle those actions (Cornerstone Research)
  • $50B (est.) in fees for plaintiffs’ and defense lawyers
  • $2.5B (est.) paid in D & O premiums annually by US public companies  Read more…

SEC whistleblower bounty program uncovers $14m award

October 30, 2013 1 comment

whistleblowerEarlier this month, the SEC awarded $14 million to an anonymous whistleblower who sent a tip about securities fraud that helped the Commission take enforcement action and recover investment funds. The case was the largest amount awarded since the launch of the U.S. Securities and Exchange Commission’s (SEC) whistleblower bounty program, which was created to help eliminate illegal and fraudulent financial conduct and to promote greater corporate compliance with federal securities laws.

Section 922 of the Dodd-Frank Act (DFA) established new whistleblower incentives and protections, including awards to individuals “who provide the SEC with original information about securities fraud that leads to the successful SEC enforcement action resulting in monetary sanctions over $1 million.” This is the third award the Read more…

Securities Litigation and publicly-traded Chinese firms: lacking checks and balances

November 28, 2011 Leave a comment

Reports continue to be made of accounting and corporate governance irregularities for publicly traded companies based in China.  These companies, which may be listed on stock markets in the U.S., Hong Kong, mainland China or some combination of the three have greatly increased in number over the past five years.

Reports in today’s Wall Street Journal outline continued shortcomings in the accuracy of reporting from these companies.  The article specifically mentions Sino-Forest in regard to allegations that it misrepresented the actual timber holdings of this firm.  The article goes on to discuss the sentiment, strong until recently, that these shortcomings could be ignored given the great growth of the Chinese market and GDP. Read more…

Ruling in Matrixx case may lead to other securities class actions

The Supreme Court ruled this week on a case that we have been watching closely.  The Court’s decision in Matrixx Initiatives, Inc. et al. v. Siracusano et al. came down solidly on the side of the plaintiffs and leaves the biopharma industry (and all others) without a “bright line” test for reporting adverse events. Writing for the court, Justice Sotomayor, in a unanimous opinion, rejected the argument of Matrixx that adverse product reports must be “statistically significant” in order for a manufacturer to have an obligation to disclose the reports to investors. As a result of the Court’s decision, shareholders claims against Matrixx for its alleged failure to disclose reports that its product, Zicam, caused certain side effects for users will now be going forward through litigation.

Justice Sotomayor wrote that medical experts and the FDA rely on evidence other than statistically significant data to establish an inference of causation – “[i]t thus stands to reason that reasonable investors would act on such evidence.”

Matrixx’s argument to the Court urged the adoption of the “bright line” test that reports of adverse events with a pharmaceutical company’s product cannot be material absent a sufficient number of reports to establish statistical significance. Matrixx further argued that statistical significance is the only reasonable indicator of causation. Read more…

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. Read more…

IPOs are back

February 4, 2010 Leave a comment

WGA client, Ironwood Pharmaceuticals, completed their initial public offering of stock earlier this week.  Ironwood sold 16.7 million shares at $11.25 per share.  They ended up their first day of trading up by more than 3%.  The gross proceeds of over $187 MM were the most raised by a biotechnology R & D company since 2002.  Their post-IPO market capitalization is over $1B.

One significant new expense for a company going public is the greatly heightened cost of Directors & Officers Liability Insurance. This is due to the increase in risk exposures arising out of a plethora of new shareholders.  Securities litigation, in particular, becomes much more likely for publicly-traded companies.  Read more…