On May 8, 2009, the United States District Court for the SDNY dismissed with prejudice the securities class action against Biovail Corp. and several of its officers and directors. The complaint related to statements alleged to have been made by the company regarding its drug Aplenzin during the product’s U.S. regulatory approval process.
U.S. Judge Colleen McMahon ruled that the Amended Complaint’s scienter allegations were “woefully deficient,” and amounted to no more than a “‘generalized motive’ of increasing corporate profits, which has uniformly been deemed insufficient.” The court also found that plaintiffs failed to adequately plead loss causation because the Amended Complaint did not “identify any ‘corrective disclosure’ that revealed the existence of some prior alleged misrepresentation by Defendants and so caused Biovail’s stock to decline.”
The court further characterized the lawsuit as “a prime exemplar of a legally baseless strike suit.”
