A group of investors led by the City of Atlanta Firefighters’ Pension Fund has agreed to a $36 million settlement related to a securities fraud class action claim against Taro Pharmaceuticals Industries Ltd.
The investor group sued Taro Pharmaceuticals in June 2017, alleging the company violated federal securities laws by issuing materially false and misleading statements and made omissions related to its competition and the cause of its sales growth. It also accused Taro of fixing prices on at least seven drugs with other generic drug companies and hiding this information from investors.
According to court documents, Taro “reaped over $1.5 billion in collusive revenue from this alleged price fixing” between mid-2013 and 2016, which accounted for 47% of the company’s revenues during this time.
“This conspiracy was possible because the markets for the drugs were highly susceptible to collusion, specifically because they were dominated by only a few companies,” the investors wrote in their complaint.
If approved by the court, the settlement will create a $36 million cash fund, plus earned interest, for eligible class members, before the deduction of attorneys’ fees and expenses. According to the Atlanta Firefighters’ damages expert, the amount is equal to an average recovery of approximately $2.53 per allegedly damaged share, before deductions.
Lawyers for the investors said they decided to settle the case due to the “expense and length” of the legal proceedings needed to pursue the claims through trial and appeals, as well as the difficulties in establishing liability.
According to the settlement, approved in May by U.S. District Judge Andrew L. Carter Jr. in U.S. District Court for the Southern District of New York, Taro continues to deny “each and every one of the claims” alleged by the investors and agreed to settle the claims “to avoid and eliminate the burden, expense, uncertainty, and risk of further litigation.” The settlement stipulates that it is not an admission of any wrongdoing by Taro or its employees.
Representatives from Taro Pharmaceuticals could not be reached for comment. Its parent company, Sun Pharmaceutical Industries Ltd., did not immediately respond to a request for comment.
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Tags: City of Atlanta Firefighters’ Pension Fund, Class Action, Lawsuit, price fixing, Settlement, Sun Pharma, Taro Pharmaceuticals