Monday, 25 July 2016
Last updated 2 days ago
Feb 23 2009 | 12:35am ET
A federal judge has angrily dismissed a lawsuit against a group of hedge funds accused of conspiring to drive down the price of a Canadian pharmaceutical company.
U.S. District Judge Stanley Chesler tossed the lawsuit, filed by shareholders of Biovail Corp., and sanctioned the plaintiffs’ attorneys. He blasted them for using documents that another federal judge in another Biovail case had ordered sealed and barred from use in other cases.
“This argument insults this court and, moreover, mocks the judicial system,” Chesler wrote. The conduct of the shareholders’ lawyers, William Federman and Evan Smith, “is so egregious, and the futility of imposing alternate sanctions so clear, that dismissal is the only appropriate sanction.” He said the shareholders’ suite and Biovail’s own suit against the hedge funds, including SAC Capital Advisors, were “all part of a choreographed strategy by Biovail and its attorneys” following a shareholder lawsuit against Biovail.
Chesler’s harshness stems from Federman and Smith’s use of confidential Banc of America Securities documents Biovail tried to use in its case against the hedge funds. U.S. District Judge Richard Owen in New York ordered those documents sealed.
The Biovail shareholders accused SAC of helping “ghostwrite” negative analyst reports about Biovail while the hedge fund shorted its stock. Biovail itself had accused the hedge funds and BofA of conspiring to drive down the company’s stock price.