On June 15, 2023, Judge Michael A. Shipp of the United States District Court for the District of New Jersey, in an unpublished opinion, adopted a Special Master’s Report and Recommendation denying a motion to dismiss claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, against an accounting firm (the “Firm”) in connection with an audit report it issued for a pharmaceutical company’s (the “Company”) financial statements in connection with the Company’s public offering. In re Valeant Pharmaceuticals Intl., Inc. Securities Litigation, No. 15-7658 (MAS) (LHG) (D.N.J. June 15, 2023). We previously covered the district court’s decision denying a motion for judgment on the pleadings in this action, as well as the district court’s decision denying a motion to dismiss by other defendants in the action.
As background, plaintiff alleged that in connection with the public offering, the Firm issued and certified an audit report on the Company’s 2014 financial statements that contained false and misleading statements that, once revealed, caused the Company’s stock price to drop below plaintiff’s original purchase price. Plaintiff filed suit against the Company and the Firm, among others, alleging in pertinent part that the Firm’s audit report assured investors that the Company’s financial statements complied with generally accepted accounting principles (“GAAP”), that the Company had effective internal controls,...
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