Hartford, CTA securities lawsuit alleging a company inflated its stock price by misrepresenting its products has been given the go-ahead to continue by the US Supreme Court. The securities fraud lawsuit brought up important questions about class-action status in securities fraud litigation, with the Supreme Court finding in favor of the plaintiffs.
The New York Times (3/2/13) reports the lawsuit was filed against Amgen - a biotechnology company - by Connecticut’s public employee retirement plans. The securities lawsuit alleged Amgen misrepresented the safety of two of its drugs, which inflated the price of the company’s stock. The lawsuit wound up in front of the Supreme Court when Amgen argued plaintiffs should have to show the company’s alleged misrepresentations affected the stock price.
The retirement plans argued that class-action status is granted in lawsuits when plaintiffs can show they all have the same question of law or fact. The Supreme Court agreed with the plaintiffs in a six-to-three decision, and allowed the class-action lawsuit to go ahead. In other words, the plaintiffs do not have to show their allegations are true to be granted class-action status, they simply have to show that they are all affected by the same issue.
“Because materiality is judged according to an objective standard, the materiality of Amgen’s alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent,” Justice Ruth Bader Ginsberg wrote for the majority. “The alleged misrepresentations and omissions, whether material or immaterial, would be so equally for all investors composing the class.”
Amgen has said it will defend itself against the lawsuit.
Meanwhile, Merck & Co. will pay almost $700 million to settle class-action lawsuits filed by shareholders who alleged they lost money because the drug company withheld information on one of its drugs. The lawsuits alleged Merck waited two years after receiving results of its clinical trial to disclose negative results of that trial, according to Genetic Engineering & Biotechnology News (2/15/13).
The drug in question, Vytorin, was part of a trial called ENHANCE in 2006, but results were not made public until 2008, the lawsuit claims. Merck said it believes it and Schering-Plough, which Merck purchased in 2009, acted properly. Approximately $688 million total will go to the two class-action lawsuits.
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