A securities class action suit was filed against a medical company and certain executives following claims the defendants violated provisions of federal securities laws.
The lawsuit against Unilife Corporation was filed in the U.S. District Court for the Southern District of New York on behalf of investors who purchased shares in the company during the class period between Feb. 3, 2014 and May 23, 2016, according to a press release. The company develops, manufactures and sells injectable drug delivery devices. Unilife works with pharmaceutical and biotechnology companies to come up with systems for injectable therapies.
Alleged policy and legal violations impact Unilife
The class action filing claimed Unilife and certain company officers made materially false and misleading statements and/or failed to disclose information about the corporation’s business, compliance and operational policies. Specifically, the class action suit alleged that Unilife’s former chief executive officer and former chairman of the board of directors each breached company policies and procedures and violated certain regulations.
The lawsuit went on to claim that the defendants did not have proper internal controls over both financial reporting and accounting. The class action also claimed Unilife was unable to file its quarterly report on Form 10-Q for the three months ending on March 3, 2016, on time due to the lack of internal controls. As a result of these claims, the securities class action complaint alleged the company’s financial statements and the defendants’ announcements regarding Unilife’s operations, business and prospects lacked reasonable basis and/or were false and misleading.
An investigation found former Unilife executives breached company policy, and potential broke laws.Investigations drag down stock prices
On May 8, 2016, Unilife informed investors that it was delaying its earnings conference call, which had been scheduled for the next day. The postponement stemmed from the discovery that the company’s former CEO and chairman of the board of directors may have violated both corporate policy and the law. Unilife disclosed that it looked into the possible impact the executives’ violations had on financial reporting and internal controls. Specifically, the investigation covered how these problems may have affected past financial reporting, current interim financial information and management’s certifications. After this was made known, Unilife stock dropped $1.50 per share, or more than 29 percent, to close at $3.60 per share on May 9.
After the market closed on May 11, more adverse news was released. The company filed a notification of late filing on Form 12b-25 with the Securities and Exchange Commission. After this, Unilife announced that its management team at the time found violations of policy and procedure and possibly laws and regulations carried out by the former CEO and former chairman of the board of directors. The company added that it had launched an investigation into how the discovered infractions may have impacted the company. As a result, Unilife explained it would not be able to file its quarterly report on Form 10-Q for the period ending March 31.
This news had an adverse effect on Unilife securities, as the stock fell $0.30 per share, or 8.1 percent, to close at $3.40 per share on May 12. The following day, the decline continued. This time Unilife stock slid $0.28 per share, or 9.1 percent, to close at $3.12 per share.
On May 23, after the market closed, the company revealed it received a letter from The NADSAQ Stock Market LLC explaining that Unilife failed to comply with NASDAQ Listing Rule 5250(c)(1) because of its failure to file the Form 10-Q in a timely manner. On this news stock prices fell once again, dropping $0.31 per share, or more than 10 percent, to close at t $2.64 per share on May 24.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or info@battea.com.