In this Rule 10b-5 case, the plaintiffs alleged that the price of ordinary common shares of a major pharmaceutical company, primarily traded in Europe, and American Depository Receipts (ADRs), traded in the United States, were artificially inflated due to false and misleading statements made by the company regarding the safety of a specific drug.
In this Rule 10b-5 case, the plaintiffs alleged that the price of ordinary common shares of a major pharmaceutical company, primarily traded in Europe, and American Depository Receipts (ADRs), traded in the United States, were artificially inflated due to false and misleading statements made by the company regarding the safety of a specific drug. The plaintiffs further alleged that the company misled investors regarding settlements paid by the company due to litigation related to the drug’s safety. Finally, corrective information regarding the drug was allegedly disclosed to the market on three occasions.
The expert opined that the event study was substantially flawed and unreliable.
With the assistance of Cornerstone Research, a law and business expert assessed the event study methodology put forth by the plaintiffs’ expert and examined whether a statistical link could be established between the allegedly corrective disclosures and declines in the company’s stock or ADR price. The expert opined that the event study was substantially flawed and unreliable. He further found that a properly constructed event study, which considered confounding events, did not establish loss causation between the allegedly corrective disclosures and declines in the company’s stock or ADR price.