Labaton Sucharow Files Direct Action on Behalf of Boeing and Mississippi PERS Against Valeant Alleging Securities Fraud
NEW YORK (September 28, 2017) – Labaton Sucharow LLP filed separate lawsuits on behalf of the plaintiffs Boeing Company Employee Retirement Plans Master Trust (Boeing) and Public Employees’ Retirement System of Mississippi (Mississippi PERS) against Valeant Pharmaceuticals International, Inc. (Valeant), certain of Valeant’s current and former senior executives, and Valeant’s external auditor, PricewaterhouseCoopers (collectively, the defendants), in connection with alleged fraudulent activity. The actions, The Boeing Company Employee Retirement Plans Master Trust et al. v. Valeant Pharmaceuticals International, Inc., No. 17-cv-07636 (D.N.J.) and Public Employees’ Retirement System of Mississippi v. Valeant Pharmaceuticals International, Inc., No. 17-cv-07625 (D.N.J.), generally allege a massive, fraudulent scheme perpetrated by the defendants to artificially inflate the price of Valeant’s securities through a covert pharmacy network, deceptive pricing and reimbursement, and improper accounting.
The plaintiffs allege violations of the federal securities laws, as well as claims under New Jersey state law. More specifically, they assert: 1) claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and 2) claims for violations of the New Jersey Racketeer Influenced and Corrupt Organizations Act. By invoking the RICO law in New Jersey, the location of Valeant's U.S. headquarters, the plaintiffs could seek a penalty three times as large as the losses it sustained from the decline in Valeant's share price. The Boeing complaint alleges additional claims for violations of § 18 of the Securities Exchange Act of 1934, as well as common law fraud/fraudulent inducement and negligent misrepresentation.
As the complaints allege in greater detail, pharmaceutical and medical device manufacturer giant Valeant implemented a growth by acquisition model through which it massively increased the prices of newly acquired pharmaceutical products, including “orphan drugs” that treat rare medical conditions and have little to no generic competition. Unbeknownst to investors, Valeant’s sales of these products following their price-hikes, and its publicly reported revenue growth, depended upon a secret network of captive pharmacies and a number of deceptive business practices.
The defendants’ alleged misrepresentations inflated the price of the common stock and debt securities in which Boeing and Mississippi PERS invested. When the truth was revealed through a series of disclosures that first began in late September and early October 2015, the value of Valeant securities plummeted over 90 percent, causing the plaintiffs to suffer substantial investment losses.
The Labaton Sucharow team leading the cases include partners Serena P. Hallowell, Jonathan Gardner, and Eric J. Belfi, with assistance from attorneys David J. Schwartz, Thomas W. Watson, and Roger W. Yamada. The Firm previously filed its first direct action against Valeant on behalf of Lord Abbett & Co. LLC.