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In re Biovail Corporation Securities Litigation
(United States District Court for the Southern
District of New York)
This is a securities fraud class action filed on behalf of all
investors who purchased the common stock of Biovail Corporation ("Biovail" or the “Company”)
between February 7, 2003 and March 2, 2004 (the “Class Period”). Defendants include the
Company and certain of its former senior officers and directors, including Eugene N. Melnyk,
Biovail’s former Chairman and CEO. Biovail is a pharmaceutical company headquartered in Canada,
with operations in the United States.
BLB&G and Ontario Teachers' Announce $138 Million Settlement
December 11, 2007 ― After nearly
four years of intensive litigation, Co-Lead Counsel BLB&G and its client, Court-appointed co-lead Plaintiff
the Ontario Teachers' Pension Plan Board
("OTPP"), announce a settlement agreement of $138 million in cash with Biovail
Corporation and certain of its officers. This is the second largest
recovery in a securities case involving a Canadian issuer, second only to
Nortel―another case in which OTPP was represented by BLB&G as
Co-Lead Plaintiff. The settlement is pending approval by the United
States District Court for the Southern District of New York.
Lead Plaintiffs File Second Amended Complaint Under
Seal; Ask Court to Unseal Complaint to Bring to Light Allegations
Which Rebut High-Profile Biovail Lawsuit Against Hedge Funds and Financial Analysts
On August 25, 2006, Lead Plaintiffs filed under seal a Consolidated
Second Amended Class Action Complaint (the “SAC”), which, among other things, added
as a named defendant Rolf Reininghaus, former Senior Vice President and member of the
Company’s Executive Committee. The SAC sets forth a number of new allegations based on
the discovery obtained to date. Specifically, the SAC alleges that Defendants (1) made
false statements about the efficacy and purported unique medical benefits of CLA in an
effort to bolster sales of the drug; (2) artificially stimulated demand for CLA by paying
doctors to write prescriptions; and (3) concealed manufacturing problems which negatively
impacted sales of the drug. The SAC further alleges that Defendants improperly booked
millions of dollars of earnings on sales of CLA in violation of Generally Accepted
Accounting Principles (“GAAP”).
The SAC also addresses – and refutes -- the highly-publicized
claims Biovail made in an action the Company filed on February 22, 2006 in New Jersey Superior
Court against twenty-two separate defendants. In that lawsuit, Biovail alleges that the decline
in the price of the Company’s stock during the Class Period was not due to the fraud alleged by
Lead Plaintiffs, but to a supposed conspiracy between certain short-selling hedge funds and
financial analysts, who allegedly conspired to manipulate the market by issuing false negative
reports about the Company. On March 26, 2006, Biovail’s Chairman and former Chief Executive
Officer, Eugene Melnyk, appeared on 60 Minutes, and reiterated to a national television
audience the allegations that Biovail made in its action against the hedge funds.
The SAC rebuts Biovail’s allegations by showing that the decline in the price of the
stock that occurred during the Class Period was not the result of the supposed hedge
fund conspiracy, but the fraud alleged by Lead Plaintiffs, and that much of what the analysts
wrote about Biovail was accurate.
Lead Plaintiffs filed the Second Amended Complaint under
seal because it quotes from documents that Defendants designated as “Confidential” pursuant
to the Protective Order entered in this Action. The Court has denied Lead Plaintiffs' motion to unseal
the Second Amended Complaint.
In March 2007 the parties concluded briefing of Lead Plaintiffs’ motion
for class certification and on March 23, 2007, the parties argued the motion before Judge Owen. That motion
is pending. The case is proceeding in active discovery.
Firm partner Steven Singer, Senior Counsel
Rochelle Feder Hansen and
Niki Mendoza and
associate
Katherine
McCracken Sinderson are responsible for prosecuting this action.
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