Valeant faces potentially costly securities fraud lawsuit in U.S.

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Valeant Pharmaceuticals International Inc. has been selling assets, paying down debt and riding a recovery of its shares from their lowest point last spring. But one big uncertainty – its potential legal costs – just got bigger.

Lord Abbett & Co., the mutual fund company, filed a securities fraud lawsuit against Valeant on Wednesday alleging that it bought shares in the drug giant at an artificially high price because of misinformation provided by Valeant. The suit, filed in federal court in New Jersey and alleging violations of New Jersey’s racketeer influenced and corrupt organizations (RICO) law, represents a new and potentially costly legal attack on Valeant, which is already facing lawsuits over alleged manipulation of drug prices.

By invoking the RICO law in New Jersey, the location of Valeant’s U.S. headquarters, Lord Abbett could seek a penalty three times as large as the losses it allegedly sustained from the decline in Valeant’s share price. Federal securities laws don’t allow investors to invoke national RICO laws in comparable shareholder suits.

Read more at The Globe and Mail

This article is summarized by Canadian Fraud News Inc.