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In re Boston Scientific Corporation Securities Litigation
05-11934-JLT, 2007 WL 1775695, D.Mass, 06/21/2007
Holding
The Private Securities Litigation Reform Act (“PSLRA”) requires that a complaint alleging securities fraud based on misstatements or omissions of material fact specify “each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed.”
Detailed Summary
This securities fraud class action suit was filed by investors against a company manufacturing heart stents. Plaintiffs alleged that defendants made false statements and concealed material information about the company from the investment community, causing the market price of the company’s securities to be artificially inflated, and enabling the individual defendants to enrich themselves. The defendants filed motion to dismiss. In granting the motion to dismiss, the court said that the defendants made an adequate disclosure of the existence and scope of a certain intellectual property and the breach of action suit filed against the company. The defendants were able to satisfy the requirements of Item 103 of Regulation S-K by revealing the potential risk of the pending litigation. Regarding the accusation made by the plaintiffs that the defendants misled the investment community about the ongoing investigation conducted by the Department of Justice against senior officials of the company, the court ruled that the defendants likewise made adequate disclosures of this matter by stating in its public filings the potential risk of the adverse outcome of the DOJ investigation. The court found that the company’s disclosure of this matter complied with the regulations of the Securities and Exchange Commission. Regarding the accusation that the defendants withheld vital information regarding the problems encountered with the product of the company prior to the product recall, the court ruled that the plaintiffs failed to plead facts that would suggest that the complaints received from American doctors were different from those received by the company in Europe, and that plaintiffs did not charge that defendants committed falsehoods in their public filings that the complaints from European doctors declined over time. On the basis of this reasoning, the court granted the motion to dismiss.
Service
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