Shareholders regularly file lawsuits seeking class-action status against companies alleging securities fraud. But the life sciences industry continues to attract more than others, according to a new analysis.
Last year, there were 67 such lawsuits filed against drug makers and biotechs, along with their directors, officers, and key personnel. This amounted to a whopping 71 percent increase from 2015 and was also substantially higher than at any time in the past five years, according to the Dechert law firm, which conducted the analysis.
About the Author Reprints
This closing thought – ‘life sciences companies remain attractive targets for class action securities fraud claims’ – seems aligned with The Willie Sutton school of law. When asked why he robbed banks, his rejoinder was ‘Because that’s where the money is.’
Every press release, forward looking statement, annual report, etc that emanates from the bowels of big Pharma is thoroughly scoured by company lawyers before being made public. They really do understand the meaning of false representation. It is no coincidence that these small cap companies, most of which are not staffed with lawyers carry they “IPO mindset” into their published statements. They all had to get up there in their zoot suits to beg for investor money, and in a private conference room with the VC guys in such a setting, Powerpoint presentations are not pre-vetted for accuracy; in fact they exaggerate stufff so that they can get the $$$ in the first place. Once they go public they pay back the VC guys, but now they have to please the shareholders who took a flier on some Podunk life sciences company touting the answer to cancer. No surprise at all.