A company is obligated to disclose to shareholders anything within its knowledge that could affect its stock price. Failure to do so, could result in potential liability. For example, a class of shareholders filed a securities lawsuit against HCA Holdings Inc. ("HCA") alleging that prior to its $4.3 billion initial public offering ("IPO"), HCA failed to disclose an ongoing internal investigation of unnecessary cardiac procedures after a complaint made by a whistleblower. Schuh v. HCA Holdings, Inc., et al. No. 3:11-cv-01033 (M.D. Tn. 2011).
The HCA investors claimed that HCA's own investigation indicated heart procedures were routinely being performed on patients without significant heart disease. In other words, unbeknownst to investors, HCA was performing unnecessary, but profitable procedures prior to its IPO. After investments had been made in the public offering, the truth surfaced, which ultimately led to a 60 percent decline in growth targets. As a result, while the original shares were offered at $30 per share in March 2011, the shares plummeted to $18.81 per share by that October. More recently, albeit its refusal to admit to any wrongdoing, HCA has agreed to pay $215 million to settle the securities lawsuit.
The legal team at SFMS has substantial experience representing diverse clients on both sides of investment-related disputes and in regulatory proceedings and investigations before government agencies and industry entities, as well as SEC whistleblowers. If you have any questions regarding this subject or this posting, please contact Chiharu Sekino (firstname.lastname@example.org) or Alec Berin (email@example.com). We can also be reached toll-free at (866) 540-5505.
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Kass, Dani. "HCA To Pay $215M To Settle Shareholder Class Action." Law360. Last modified on November 4, 2015.