Valeant faces new legal challenge
Valeant Pharmaceuticals’ legal woes have intensified after a New Jersey mutual fund company filed a securities fraud lawsuit against the embattled drug maker.
Lord Abbett & Co. alleges in a lawsuit filed in U.S. federal court in New Jersey on Wednesday that it suffered “massive losses” because it invested when the company’s share price was artificially inflated due to public misinformation.
The plaintiff made eight allegations including state-level racketeering, violations of securities laws and fraud against Valeant (TSX:VRX), several former senior executives and accounting firm PricewaterhouseCoopers. The law firm is requesting a trial by jury.
Lord Abbett said in a 156-page statement of claim that the lawsuit stems from a fraudulent scheme to artificially inflate the price of Valeant’s stock through a clandestine pharmacy network (Philidor Rx Services), deceptive pricing and reimbursement, and fictitious accounting.
Instead of investing at the level of other firms in research and development, it said the Quebec and New Jersey-based drug maker completed more than 100 acquisitions between 2008 and 2015 for more than US$40 billion.
Lord Abbett said Valeant executives then knowingly or recklessly misrepresented its actions.
The allegations against Valeant have not been proved in a court of law. The company couldn’t be immediately reached for comment.
The company faces a series of shareholder lawsuits and criminal fraud investigations by U.S. authorities including the Department of Justice and Securities and Exchange Commission.