Securities class action suit against Dr Reddy’s in US
NEWDELHI: Drug firm Dr Reddy’s Laboratories Ltd on Wednesday said the firm has been served a securities class action lawsuit in the US for alleged violations of federal securities laws. The lawsuit, filed in the US District Court of New Jersey, seeks damages to compensate investors for a purported decline in Dr Reddy’s share prices caused by alleged misstatements or omissions.
“Further to our intimation dated August 28, 2017 with regard to US securities class action lawsuit, we would like to inform you that the US securities class action lawsuit has been served on the company in the US by the lead plaintiff,” Dr Reddy’s said a notice to the Bombay Stock Exchange (BSE).
In the notice, the company said it believes that the asserted claims “are without merit and (the company) intends to vigorously defend itself against the allegation”.
In a class action lawsuit, one or several persons sue on behalf of a larger group of persons, referred to as the class, if a dispute is common to all and the number of affected persons is large.
After the announcement, shares of the Hyderabad-based drug maker declined 0.88% to ₹2,270.65, while the Sensex fell 0.05% to 33,602.76 points.
The suit has been filed on behalf of investors who purchased or acquired Dr Reddy’s shares on the New York Stock Exchange between June 17, 2015 and August 10, 2017. In this period, shares of the company plunged 42.76% on the New York Stock Exchange to $30.33 apiece.
A number of US law firms had in August called upon investors to move class action lawsuits on charges that the company had given misleading statements related to issues of manufactur- ing compliance at its Indian facilities.
Mint in August reported that the lawsuit alleged Dr Reddy’s made materially false statements and/or misleading statements and omissions related to its corporate quality systems, specifically in connection with a warning letter issued by the US Food and Drug Administration (FDA) in November 2015 and a letter from the German drug regulator dated 10 August 2017.
According to Vijay Pal Dalmia, senior litigator and partner at law firm Vaish Associates, Dr Reddy’s could face “serious financial implications”.