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St. Jude Settles Securities Suit for $39M

As an investor, the companies you invest in have a duty to disclose any information that may affect their stock values. In 2012, a class of investors sued St. Jude Medical Inc. ("St. Jude" or "the Company") for allegedly lying about the quality of the new leads on its cardiac rhythm management ("CRM") devices.

CRM provides diagnosis and treatment for disorders that affect the heart's electrical system that may cause rhythm problems. Leads connect an implantable device to a patient's heart for CRM. Although St. Jude's leads underwent several errors, led to human deaths, product recalls, and intervention by the U.S. Food and Drug Administration ("FDA"), St. Jude's executives insisted that its newest generation of leads resolved such issues.

However, the Minneapolis Heart Institute Foundation published an article stating that the Company's leads were prone to high-voltage failures, which led to more than a dozen deaths. The FDA was then prompted to investigate testing problems on device leads. According to the complaint, an executive lied about there being nothing for the FDA to find at St. Jude's facility in Sylmar, California.

In October 2012, however, St. Jude publicly announced that the FDA found issues with its practices at its Sylmar facility. Nonetheless, investors could not tell what the issues were because the publication was so heavily redacted.

Consequently, investors filed a complaint, alleging that the lies about the leads inflated the Company's stock value, which dropped substantially as the truth was revealed.

After several years of litigation and negotiations, St. Jude has agreed to settle the suit for $39 million. The Company does not admit to any wrongdoing, but decided not to incur the expenses and risks of continued litigation.

The legal team at SFMS has significant experience litigating securities matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (nlussier@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES

Greene, Kat. "St. Jude Ends Investor Suit Over Cardiac Devices For $39M." Law360. Last modified on July 7, 2016.

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