A securities class action suit was recently filed against a provider of customized knee replacements after the company allegedly made false and/or misleading statements and failed to report certain adverse facts.
Class action lawsuit follows ConforMIS manufacturing issues
The class action filing against ConforMIS Inc. was made in the U.S. District Court for the Southern District of New York on behalf of investors who purchased securities in the company during its initial public offering on July 1 or on the open market during the class period between July 1 and Aug. 28, a press release stated. The company designs and manufactures custom replacements for both the tibia and the femur. ConforMIS believes that fitting these knee replacements to each individual patient offers unique advantages not available with “off-the-shelf replacements.”
“ConforMIS did not reveal its manufacturing process was improper.”
The class action complaint alleges that the defendants made false and/or misleading statements and failed to disclose adverse facts about its operations, business and prospects in connection with its IPO and Securities and Exchange Commission filings that followed. The defendants did not reveal that ConforMIS’ manufacturing process was improper, leading a number of its knee replacements to be defective. Due to the issues with the company’s manufacturing, the class action lawsuit claims that the company’s public statements were materially false and/or misleading at all times.
Recall announcement detrimental to stock prices
On Aug. 31, before the market opened, ConforMIS announced that it had initiated a voluntary recall on specific serial numbers of patient-specific devices within its line of knee replacements. The announcement came following complaints of moisture on the patient-specific instrumentation. The company ultimately recalled about 950 patient-specific knee replacement devices. Of the products recalled, around 650 were used in knee-replacement surgeries while another 300 had been shipped but not yet used in scheduled surgeries, according to StreetInsider.com.
ConforMIS also announced at the time of the recall that it expected to significantly slow down manufacturing in September and October until it completed an investigation of its products and developed a plan for resolving the issue with its patient-specific knee replacements.
Following this news stock in the company dropped $3.78, or 19.11 percent, to close at $16.00 per share on Aug. 31. By the close of trading on Sept. 2, ConforMIS stock was trading at $14.18 per share.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or info@battea.com.