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Securities

OSIS 2017 Annual Report Cover

The Foreign Corrupt Practices Act (FCPA) makes it illegal for companies to influence officials in foreign countries with personal payments or rewards—in other words, for companies to pay bribes in foreign countries. The complaint for this class action claims that OSI Systems, Inc. did just that, and did not disclose that or other adverse information, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On December 6, 2017, Muddy Waters Research published a report with the provocative title, “OSIS: Rotten to the Core.” One of its main claims, according to the complaint, was that corruption was involved in the company’s getting its Albanian contract because of the apparent “sale” of 49% of that project company for less than $5, even though the company continued to claim that it owned 100% of it.

PayPal Logo on Screen

The complaint for this class action claims that PayPal Holdings knew that its acquisition TIO Networks Corp. had security problems but hid that information, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On December 1, 2017, PayPal issued a press release saying, “A review of TIO’s network has identified a potential compromise of personally identifiable information for approximately 1.6 million customers.” This led to a fall in the stock price of 5.75%.

INC Research Logo

The complaint for this class action alleges that INC Research Holdings, Inc. (INCR) made misleadingly optimistic statements about its merger with inVentive Health, Inc., in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that the company did not disclose that inVentive was underperforming; that the merger would not deliver the results that INCR hoped it would; and that INCR’s 2017 performance would be negatively affected. When corrective information finally broker, it led to a precipitous decline in its stock prices.

Capella University Logo

Capella Education Company is a multi-armed entity that focuses on online degree and non-degree learning, serving tens of thousands of students in all fifty states and fifty-four countries. But the complaint for this class action questions whether the Registration Statement for its proposed merger with Strayer Education provides stockholders with enough information to evaluate the transaction. First, the complaint details missing items, inputs, assumptions, and figures that allegedly calls into question Capella’s and Strayer’s financial projections and sections of the Registration Statement. Second, the complaint claims that the Registration Statement doesn’t provide sufficient information on potential conflicts of interest for Capella’s officers and directors.

Paragon Commercial 2016 Annual Report Cover

On April 27, 2017, Paragon Commercial Corporation announced a proposed transaction under which it would be acquired by TowneBank, with Paragon shareholders receiving 1.720 of Towne common stock for each share of Paragon that they own. But the complaint for this class action claims that the Proxy Statement filed with the Securities and Exchange Commission (SEC) on October 26, 2017 omits enough material information to make it false and misleading under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934.

Katanga Mining

Despite the claims in its press releases, Katanga Mining Limited seems to have had difficulty sticking to proper accounting procedures, according to the complaint for this class action, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. An internal investigation has required the company to restate its financial statements for the last several years due to “weaknesses” in its control environment, management, and monitoring.

Logos of Companies in Proposed Merger

The Proposed Transaction that USAmeriBancorp negotiated to merge with Valley National Bankcorp says that USAmeriBancorp stockholders will receive 6.1 shares of Valley for each of their shares of USAmeriBancorp, provided that Valley’s stock does not fall below a certain share price. But is this fair? The complaint for this class action claims that it is not possible for shareholders to evaluate the transaction because the Registration Statement omits too much information, including such things as the figures used in projections and evaluations and the details of negotiations for new positions for the company’s CEO and others.

Child Riding Scooter

According to the complaint for this class action, the problem at one or more schools of RYB Education, Inc. was not the educational standard or methods but a failure to protect small children from sexual abuse. The complaint claims that the false or misleading information the company put out violated sections of the Securities Act of 1933 and Securities Exchange Act of 1934. The company’s Prospectus spoke of a “stringent selection, training and certification process” and “strictly implemented security and safety protocols”, but the complaint claims these statements were misleading and false, because within two months of the IPO, police were investigating at least one of RYB’s schools for the drugging and sexual molestation of children.

Vivitrol Box and Vials

Government groups, prisons, and individuals are searching for medical help in combating the opioid crisis, and according to the complaint for this class action, Alkermes seemed determined to provide it with its drug Vivitrol, even though it might not be the most effective drug available. The complaint claims that Alkermes marketed Vivitrol in ways that were not entirely honest, while keeping that information from shareholders and the public, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

OvaScience Logo

With women preferring to have children at later ages, successful fertility treatments are a promising product, even for a company that has not yet earned any revenue. According to the complaint, however, OvaScience, Inc. made misrepresentations about its Augment procedure in the Registration Statement for its initial public offering (IPO), in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. The complaint claims that, among other things, the company tried to avoid FDA regulation, used too small a sample size and a flawed study design, and tried to claim a success rate that the study did not in fact show.

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