Shareholder Class Action Filed Against SFBC International, Inc. By The Law Firm Of Schiffrin & Barroway, LLP
RADNOR, Pa., Jan. 10 /PRNewswire/ -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the District of New Jersey on behalf of all securities purchasers of SFBC International, Inc. ("SFBC" or the "Company") from August 4, 2003 through December 15, 2005, inclusive (the "Class Period").
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll-free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.
The complaint charges SFBC and certain of its officers and directors with violations of the Securities Exchange Act of 1934. SFBC, a drug development services company, provides a range of early- and late-stage clinical drug development services to branded pharmaceutical, biotechnology, generic drug, and medical devices companies worldwide. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company engaged in improper and unseemly business practices; (2) that the Company's financial health was a direct result of its engagement in such practices; (3) that the defendants masked its improper and unseemly business practices so that SFBC could continue to report strong revenue, earnings, and tout its ability to outperform competitors because of the large numbers of participants its facilities could handle, and its ability to quickly recruit participants for drug trials; (4) that the defendants knew and/or recklessly disregarded the fact that if SFBC's improper and irregular business practices were discovered that it would have a material effect on the Company's financial health, cause it to lose its credibility for accurate drug testing, lose customers, and inhibit its ability to beat competitors and quickly recruit large groups of participants, and expose the Company to fines and possible lawsuits from victims of faulty drugs; and (5) that at all relevant times, the Company lacked adequate internal controls.
On November 2, 2005, Bloomberg News published an article entitled "Big Pharma's Shameful Secret." The article summarized the results of an extensive investigation by certain Bloomberg News reports regarding the safety of human drug testing. The article centered its investigation on SFBC and included statements from interviews with experts in the industry, SFBC drug participants, and SFBC executives. The article revealed that the Institutional Review Board ("IRB") that the Company retained to oversee testing at SFBC facilities is owned by Alison Shamblem, wife of defendant E. Cooper Shamblem, who is SFBC's vice president of clinic operations. This conflict of interest was never publicly disclosed. The article reported that, according to interviews with SFBC participants from the Company's Miami, Florida facility, participants were enrolled in back-to-back trials at SFBC, without adhering to minimum waiting requirements. According to the article, SFBC never contacted competing clinics to determine if its participants were enrolled in more than one drug trial at the same time. The article further stated that SFBC used coercive payment schemes to decrease the chance that a participant would report uncomfortable or adverse reactions to the drug. Bloomberg News also revealed that defendant Lisa Krinsky, who is described in SEC filings and Company literature as a medical doctor, has never been licensed to practice medicine in the United States. On news of this, shares of SFBC fell $9.98 per share, or 26.34 percent, to close at $27.91 per share on November 3, 2005.
Then, on November 16, 2005, Bloomberg News reported that SFBC threatened to arrange federal deportation of Latin American immigrants who disclosed health risks in clinical trials, according to people who participated in the company's Miami-based experiments. The participants also said SFBC tried to make them sign false statements. SFBC placed at least three drug trial participants in separate rooms with SFBC officials, including Chief Executive Officer Arnold Hantman, who, using profanity, threatened to call the U.S. Department of Homeland Security to have the participants deported if they didn't sign statements refuting the Bloomberg News story published Nov. 2. On news of this, shares of SFBC fell $7.20 per share, or 21.71 percent, to close at $25.97 per share on November 16, 2005.
On December 15, 2005, SFBC cut its profit forecast for 2005. The Company expected earnings per share of $1.56 to $1.61, down from $1.66 to $1.72, which the Company set forth in November. SFBC also stated that the reduction in this year's earnings estimate included 3 cents a share in legal and other expenses related to the Bloomberg articles and 2 cents in lost earnings per share "as a direct result of one client canceling two signed contracts of ongoing studies due to the Bloomberg articles." Additionally, on December 15, 2005, Bloomberg News ran another story wherein it stated that nine participants in a September drug trial in SFBC's Montreal facility tested positive for latent tuberculosis, according to the Montreal Regional Health Department. On news of this, shares of SFBC fell $1.88 per share or 10.65 percent to close at $15.78 per share on December 15, 2005.
On December 16, 2005, SFBC was reduced to "neutral" from "outperform" by Robert W. Baird & Co. Robert W. Baird & Co. stated that it had identified several misstatements from management and lost confidence in management. They pointed out that the SFBC Investigation revealed that SFBC received seven FDA Form 483 citations between 1998 and 2005 at its Miami, Florida facility, when management previously communicated to Robert W. Baird & Co. that it only received three such letters. According to Robert W. Baird & Co., one such letter, received in June 2002, related to SFBC's informed consent process. Additionally, the report stated that SFBC management informed them on December 6, 2005, that SFBC had not lost any existing business; however, on December 15, 2005, in a conference call with analysts, SFBC announced that one of its clients cancelled its drug testing studies in late November and that the Company expected slower demand for its services in the future. On news of this, shares of SFBC fell $2.64 per share, or 16.73 percent, to close at $13.14 per share on December 16, 2005.
Since November 1, 2005, the day before Bloomberg News reported that bioethicists said the company's consent process inadequately warned drug trial participants of the risks of injury and death, through December 16, 2005, SFBC stock fell from $41.49 per share to $13.14 per share, a drop of 68.3 percent.
On December 19, 2005, SFBC announced that Gerald Seifer had resigned from his position with the Company. Then on January 3, 2006, SFBC announced that its board of directors had appointed Jeffrey P. McMullen as chief executive officer replacing defendant Hantman, who was retiring. The Board also had accepted the resignation of defendant Krinsky, who served as the Company's president and chairman.
Then on January 10, 2006, the Company stated that the U.S. Securities and Exchange Commission has initiated an informal, non-public request for records primarily relating to the duties, compensation and expenses of two former employees, Lisa Krinsky and Gerald Seifer. SFBC intends to fully cooperate regarding this request.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com.
If you are a member of the class described above, you may, not later than March 6, 2006 move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action.
CONTACT: Schiffrin & Barroway, LLP Darren J. Check, Esq. Richard A. Maniskas, Esq. 280 King of Prussia Road Radnor, PA 19087 1-888-299-7706 (toll-free) or 1-610-667-7706 Or by e-mail at info@sbclasslaw.com
Schiffrin & Barroway, LLPCONTACT: Darren J. Check, Esq. or Richard A. Maniskas, Esq., Schiffrin &Barroway, LLP, +1-888-299-7706, +1-610-667-7706, or info@sbclasslaw.com
Web site: http://www.sbclasslaw.com/