Sunday, March 1, 2009

2001-Era Securities Fraud Class Action to Cost Schering-Plough at Least $165 Million

Some time this month -- in March of 2009 -- (within 30 days of February 19, 2009), Schering-Plough will have to deposit in cash at least $165 million -- into an interest-bearing escrow account -- to settle allegations that, under former CEO Richard Kogan, the company failed to adequately dislcose various manufacturing violations and problems, documented by FDA, in its plants -- resulting in a delayed US launch of Clarinex, and thus, Schering-Plough stock price declines. While Schering-Plough denies that any of this damaged the shareholders, it has finally agreed to pay the $165,000,000 to settle. And that is decidedly more than some "nuisance" value. The to-be-settled case is captioned In Re Schering-Plough Securities Litigation (NJ Dist. Ct., Case No. 01-829 Judge Hayden).

Assuming that an appropriately small number of class action participants choose to "opt-out" of this settlement, and that Judge Hayden enters a final order of approval in July 2009 (including an explicit approval of about $2.1 million in plaintiffs attorneys' fees) -- the $165 million, plus accrued interest, will be released to the plaintiffs during the third quarter of 2009.

The amount of this payment was not disclosed in the Legal Proceedings section of the SEC Form 10-K Schering filed Friday night, so it is safe to assume Schering-Plough has not yet wired the money into the escrow account. Look for that development to appear in the March 31, 2009 Form 10-Q.

I do wonder whether the current ENHANCE securities fraud putative class action litigation will result in settlement figures that are an integral multiple of the above $165 million, given what seems to be both pattern behaviour, and stronger evidence. We shall see -- I will keep you informed as to the progress of this particular federal settlement stipulation.


Anonymous said...

Oh, that Fred--boy can he think of ways to make money---

KENILWORTH, N.J., March 3 /PRNewswire-FirstCall/ -- Schering-Plough Corporation (NYSE: SGP - News) today announced the launch of AFRIN® PureSea(TM) Hydrating Nasal Rinse, the only nasal rinse product entirely made of 100 percent purified sea water. Available in the cold/allergy aisle at retailers nationwide, AFRIN PureSea is clinically proven to cleanse nasal and sinus passages of mucus, pollutants, and irritants so users can breathe freely.

Selling sea water~what will he think of next. Maybe this is why the stock was up the other day?!

Condor said...

And he is going to get people to SNORT it, no less! (Think Jacquin Phoneix in "We Own the Night", here.)

P.T. Barnum was undoubtedly right.


Anonymous said...

BTW-nasal lavage has been common for awhile e.g., eastern cultures have used Neti pots.

For me, it is just the marketing chutzpah by an 'ethical' pharma to report that this is 'clinically' proven.

Compared to what-when did they do the study for the French seawater? Was it better than normal saline?

Hey, maybe they compared it to Vytorin?!