Mahwah, NJEarly in the New Year a securities lawsuit seeking class action status was filed in the US District Court for the Southern District of New York on behalf of those who purchased Stryker common stock over a three-year period ending in 2008. The plaintiffs allege that a certain collection of executives and officers failed to disclose the true financial health of the medical device company, allowing investors to believe that Stryker was more robust than it actually was.
The problem goes back to January 2008, when the manufacturer announced that it was recalling a hip product. Nearly a year later, during an investor conference hosted by Credit Suisse on November 13, 2008, Stryker revealed that it was still losing revenues and customers as a result of the recall. During that time, Stryker stock fell 23 percent, closing at $36.11 per share on November 20, 2008.
According to the 1/15/09 issue of CNN Money, Stryker allegedly reported and/or projected 20 percent-plus earnings growth during the years 2006, 2007 and 2008.
The lawsuit charges that Stryker and certain of its executives and officers violated federal securities laws by failing to disclose material adverse facts about the company's true financial condition, business and prospects. Specifically, the complaint alleges that defendants violated federal regulations regarding the manufacture of medical devices, subjected Stryker to unnecessary risks of sales disruptions, lower revenues and product liabilities due to product recalls and hid hundreds of millions of dollars of additional compliance costs both prior to and during the Class Period identified as January 25, 2007 through November 13, 2008.
The allegation, therefore, is that investors buying stock within the identified class period may have done so under false pretenses pursuant to the allegation of false and misleading information and data forthcoming from the company.
Any party interested in coming forward to serve as the lead plaintiff in the proposed class action has until March 16 of this year to do so.