Earlier this week a case filed by GMO Trust, et al against Bausch + Lomb was removed to New Jersey federal court. The plaintiffs alleged that the defendants engaged in securities fraud by keeping their stock price artificially high.
The defendant, Bausch Health, is a New Jersey-based pharmaceutical company, formerly known as Valeant Pharmaceuticals International, Inc.
The complaint states that the “plaintiffs are victims of Bausch Health’s securities fraud. They represent funds that invest on behalf of, inter alia, pension, endowments, and charitable institutions, that invested in Bausch Health at a time when its stock price was artificially inflated by the fraud.”
The plaintiffs allege that their case is “part of a group of securities fraud actions” against the defendants and that they had suffered damages that totaled $4.2 billion.
The allegations are based on a series of acquisitions that were made to show that the company was growing through organic means, claims that the plaintiffs say are untrue. According to the complaint, the company’s strategy involved convincing investors that the company was growing thanks to volume increases, rather than “unsustainable” price hikes on newly-acquired drugs.
The plaintiffs also alleged that the defendant had created “covert distribution channel to create the illusion of organic growth in its dermatology segment.” According to the complaint, the defendant in 2013 built a “mail order pharmacy that would serve only Bausch Health.”
After the allegations of the defendant’s fraud were known to the public, “Bausch Health stock plummeted from over $250 per share in mid-2015 to under $25 per share by mid-2016, resulting in a market capitalization loss of almost $100 billion.
The defendant is facing two counts of declaratory judgment for constructive fraudulent conveyance.
The plaintiffs are being represented by the following nine separate legal counsel. Rolnick Kramer Sadighi LLP, Fleischman Bonner & Rocco LLP, Kirby McInerney LLP, Dietrich Siben Thorpe LLP, Mark A. Strauss Law, PLLC, Grant & Eisenhofer P.A., Kasowitz Benson Torres LLP, Motley Rice LLC, and Labaton Sucharow LLP. Bausch is represented by McCarter & English.