Major Indian pharmaceutical company resolves securities fraud class action relating to FDA warning letter
Clients Major Indian pharmaceutical company
Jones Day resolved a class action lawsuit filed against a major Indian pharmaceutical company in federal court, alleging violations of the federal securities laws in connection with a warning letter issued by the U.S. Food and Drug Administration ("FDA") to the company.
The operative complaint alleged that the defendants violated anti-fraud provisions of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by making false or misleading statements (1) prior to the warning letter, about the company's compliance with FDA regulations, and inspectional observations issued by the FDA to the company; and (2) after the warning letter, about the impact of that letter, the company's remediation efforts, and resultant impact on production.
After Jones Day's success in obtaining dismissal of the claims associated with the vast majority of the alleged misstatements in the case through a motion to dismiss, the parties agreed to settle the case at a fraction of the damages originally sought. The settlement is one of the very few U.S. securities class action settlements entered into by companies from India. It involved complex and novel issues of Indian law, requiring innovative mechanisms to be negotiated and provided for in the settlement.