Drug and Device Makers are Being Hit With More Securities Fraud Lawsuits
Shareholders often file lawsuits against companies alleging securities fraud. However, last year 38 such lawsuits were filed against drug makers and biotechs, which was twice as many as the year before according to Dechert law firm, which conducted the analysis.
David Kotler, a Dechert partner, says that no regulatory changes are the cause of this. Instead, he believes the high stakes of early-stage product development are to blame. “And any adverse news can have a material impact on stock price. So in this environment, you’re more likely to see a securities fraud case,” claims Kotler.
In such a strictly regulated field, this proves how quickly the support of small companies with only a few products can change, says Kevin LaCroix, attorney and executive vice president at RT ProExec. LaCroix also points out, however, that the life sciences industry has “pretty consistently” been targeted with these types of lawsuits.
