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Securities

Computer Screen Saying "Frontier Communications"

Frontier Communications spoke glowingly of its new acquisition from Verizon in 2016, but according to the complaint for this class action, it was not admitting to very real problems—that the Verizon acquisition was underperforming and included many non-paying accounts. Instead, the press release spoke of “first-rate assets and important opportunities” from the acquisition, only gradually admitting to losses, write-offs, and a need to increase its reserves. The complaint alleges that the company provided misleading or false information, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

IXYS Products

IXYS Corporation is proposing to merge with Littelfuse, Inc., but is the deal in the best interests of shareholders? The complaint for this class action alleges that it’s impossible for shareholders to tell, because too much has been omitted from the Registration Statement, in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934. Missing information includes (1) the background of the transaction, including details of discussions with other companies, (2) key inputs and assumptions for valuation analyses, and (3) information about potential conflicts of interest facing certain members of the board.

Chin with Pimple

Novan, a drug development company, was testing a drug for acne vulgaris when it held its initial public offering (IPO) on September 26, 2016. The complaint for this class action claims that Novan’s public statements omitted important information, for example that two “identically-designed” drug trials were not in fact identical, leading investors to believe that the drug was more promising than it was. By early December, its stock price had climbed from an initial $11 to $29.09 a share—and then came a sharp drop to around $4.86, when Novan announced the results of its trials for the new drug.

General Electric Turbine

General Electric, Inc. is a large and diversified technology and financial service company, and according to the complaint for this class action, its statements in 2017 that gave investors no idea that some of its various segments, including the Power segment, were underperforming and would not meet projections for the year. The statements were false and misleading, the complaint alleges, making the company is responsible for stockholder losses when the truth emerged.

Bob Evans Farms, Winter View

Even a member of the Bob Evans Farms board of directors did not vote for its proposed merger with Post Holdings, the complaint for this class action alleges, because he was not sure that the merger consideration was greater than what the company could achieve on its own with a little more time. The complaint alleges that the merger compensation is inadequate and that the Proxy does not supply enough information for shareholders to fully evaluate the deal, omitting information about how calculations were made, non-GAAP measures, and the process of discussing post-merger employment for company officrs.

Genocea Biological Symbol

Biopharmaceutical company Genocea Biosciences claims to develop vaccines and immunotherapies for diseases with significant unmet needs, which may explain why GEN-003, a genital herpes immunotherapy product, was its lead product. Unfortunately, the complaint for this class action alleges that the outlook for GEN-003, and for the company, was not as rosy as it sounded. Specifically, the complaint claims that during the class period, the company did not disclose that it did not have the money for Phase 3 trials of Gen-003 and was therefore overstating the prospects of GEN-003.

XBiotech Biological-Looking Image

The complaint for this class action alleges that XBiotech’s statements about the success of its European Phase III trials misled investors and, when the truth emerged, its stock fell by roughly 40%. The company repeatedly touted positive results and expressed hopes for a European approval of the drug, when in reality, the complaint claims, the results of the study were inconclusive and would not support a European approval.

Capine Corporation Plant

In the proposed merger between Calpine Corporation and Energy Capital Partners, the complaint for this class action alleges, shareholders are being offered only “a measly 5% premium for their shares” as the result of a “flawed sales process.” The complaint claims that the Proxy Statement filed for the merger does not provide all inputs, choices, and assumptions underlying the calculations made by the financial advisors, Lazard Freres & Co. LLC and that the Proxy does not lay out the conflicts of interest for Lazard, Calpine’s management, or its board.

Antares Pharma Products

The complaint for this class action alleges that Antares Pharma provided false or misleading information about one of its drugs in the Food and Drug Administration (FDA) approval process, implying that it was likely to receive approval, and leading to a quick drop in its stock price when the FDA rejected it. The complaint alleges that the company’s statements were false and misleading because they did not disclose Antares had not given the FDA enough data for the drug, and that it was therefore being overly optimistic about its approval prospects.

Diana Containerships Ship

The complaint claims that Palios caused Diana to sell common shares and convertible securities at a significant discount to a company called Kalani Investments, which Kalani then sold on the market. These sales caused the price of Diana’s stock to decline, the complaint claims, after which Diana reverse-split the stock, turning a number of shares of stock into one share, which again raised the per-share price. Over eight months after the filing of the original, misleading Registration Statement, the number of shares ballooned while their price fell, so that the complaint alleges that, on an adjusted basis, the price fell from $2,500 at the beginning of 2017 to only 47 cents by October that year.

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