NEW YORK--(BUSINESS WIRE)--The U.S. District Court for the Northern District of Illinois denied defendant Akorn, Inc.’s motion to dismiss two securities fraud lawsuits brought by several investment funds represented by Lowenstein Sandler’s Securities Litigation Group, ruling that the funds’ claims can proceed against Akorn and its officers and directors because the complaints plausibly allege material misrepresentations and omissions concerning the company’s regulatory noncompliance, which led to the failure of Akorn’s $4.3 billion proposed acquisition by Fresenius Kabi AG and massive investor losses.
In 2017, Akorn, Inc., an American generic pharmaceutical manufacturer, announced that it was being acquired by Fresenius, an international health care company. A whistleblower allegedly alerted Fresenius to possible regulatory compliance issues at Akorn, starting a chain of events that ultimately led to a Delaware court ruling that Fresenius had the right to terminate the merger. Investors, including Lowenstein’s clients, suffered significant losses when the price of Akorn stock plummeted as information about Akorn’s regulatory violations was publicly disclosed. The funds have brought securities fraud actions, alleging that Akorn and its directors and officers made fraudulent misrepresentations that, among other things, violated the Securities Exchange Act of 1934.
In Twin Master Fund Ltd. et al. v. Akorn Inc. et al., and Manikay Master Fund LP et al. v. Akorn Inc. et al., U.S. District Judge Matthew F. Kennelly rejected the defendants’ motions to dismiss the investment funds’ claims, finding that the complaints had pled with particularity that Akorn made false and misleading statements in its SEC filings and communications with the market and had failed to disclose critical information to investors about Akorn’s regulatory noncompliance. Judge Kennelly also ruled that the complaints pled that the investors’ losses were connected to the revelation of Akorn’s fraud–revelations that included Fresenius’s statements regarding the cancellation of the merger.
"It is important that investment managers be allowed to hold those who violate the securities laws accountable," said Lawrence M. Rolnick, Chair of Lowenstein’s Securities Litigation group. “As we did recently in the securities fraud action against VEREIT, Inc., we have been able to provide vigorous prosecution for our clients.”
The Lowenstein team includes Lawrence M. Rolnick, Michael J. Hampson, Richard A. Bodnar, and Jennifer A. Randolph.
