Philips Pensioenfonds shares in $400m class action payout

first_imgPhilips Pensioenfonds, the €17.8bn pension scheme of the Dutch electronics giant, will share in a total payout of $400m (€365m) to be made by Pfizer, after the US pharmaceutical company settled a securities fraud class action by investors who claimed it made false statements to them.After nearly five years of litigation, both sides reached a tentative agreement last January to settle the case for $400m plus accrued interest.The deal was finally approved by the district court for the Southern District of New York last week.Claims from class members are still being processed, so the precise amounts to be allocated to investors are not yet known. But Philips Pensioenfonds, as lead plaintiff in the lawsuit, is likely to be one of the biggest beneficiaries.In a class action in the US, the lead plaintiff is appointed by the court, which generally chooses the party that has suffered the greatest economic loss. And, according to Robbins Geller Rudman & Dowd (RGRD), lead counsel for the class of Pfizer investors, not all class members are likely to claim, resulting in higher per-share distributions.In the lawsuit, investors alleged that Pfizer had illegally promoted Bextra, an anti-inflammatory drug, and several other drugs ‘off label’ to boost sales.Off-label marketing is the promotion of pharmaceutical products for uses unapproved by the US Food and Drug Administration.Pfizer and its officers were alleged to have concealed from investors that the company was earning substantial revenue from this illegal promotion, and was subject to an extensive government investigation.Materially false and misleading statements were claimed to have been made to investors between January 2006 and January 2009 (the ‘class period’).Furthermore, investors claimed that false financial results and reports were filed with the US Securities and Exchange Commission that did not sufficiently account for, or disclose, probable loss contingencies resulting from Pfizer’s off-label marketing, as required by Generally Accepted Accounting Principles.Three days after the end of the class period, Pfizer announced it had agreed to pay $2.3bn to settle allegations by the US Department of Justice that it had engaged in off-label marketing.That day, Pfizer’s share price dropped from $17.45 to $15.65.Mike Dowd, partner at RGRD, said: “We are very pleased the court approved the settlement providing a $400m recovery for Pfizer investors. “In granting the approval, the court found that the settlement and the plan of allocation – i.e. the formula for how the recovery will be shared among the class of Pfizer investors – was fair and reasonable.” The precise allocation to class members will be determined over the next few months.last_img

Leave a Reply

Your email address will not be published. Required fields are marked *