A securities class action suit was filed against a diagnostic device and services provider following claims that the company did not disclose certain pertinent facts to investors.
The lawsuit against Alere Inc. was filed in the U.S. District Court for the District of Massachusetts on behalf of investors who purchased shares in the company during the class period from May 9, 2013 through April 20, 2016, according to a press release. Alere is a global firm that provides diagnostic devices and services to medical professionals. It offers cardiometabolic, infectious disease and toxicology products and services, among others. A planned acquisition of Alere by Abbott Laboratories was recently thrown into doubt. This development had an adverse effect on share prices to the detriment of investors.
“The lawsuit alleges that Alere improperly recognized and reported revenue.”
Lawsuit claims accounting and financial reporting problems
The class action complaint claims that the defendants violated federal securities laws. Specifically, it alleged that Alere made false and/or misleading statements and did not disclose material adverse facts concerning the company’s prospects, operations and business. The class action suit alleges that Alere improperly recognized and reported revenue. This, the lawsuit notes, would be a violation of Generally Accepted Accounting Principles.
Due to Alere’s accounting issues, the company’s quarterly and annual Securities and Exchange Commission filings would have to be delayed, the class action suit explained. These circumstances cast doubt on the possibility that Abbott’s acquisition of Alere would go through. In addition, the lawsuit claims that the firms GAAP problems illustrated a lack of proper internal controls over accounting and financial reporting. As a result, the class action suit alleges that the defendants statements regarding Alere’s finances, business, operations and prospects were false and misleading and/or lacked a reasonable basis during the class period.
Around March 15, 2016, Alere disclosed its intention to delay its 2015 Annual Report. In addition, the company announced that it would have to revise financial reports for 2013, 2014 and 2015 as a result of issues with its revenue recognition policies. Alere also revealed that it had received a subpoena from the Department of Justice regarding the company’s sales practices and calling into question its compliance with the U.S. Foreign Corrupt Practices Act.
Abott’s CEO says little on Alere’s issues
Following the disclosures, Miles White, the chief executive officer of Abbott, was noncommittal regarding the potential acquisition of Alere, according to The Wall Street Journal. In February, Abbott agreed to pay $56 per share for the company. As part of the deal, Abbott would also take on Alere’s $2.6 billion in debt. However, following disclosures of improper accounting practices and a DOJ investigation, White had no comments on the future of the acquisition.
After Alere announced the DOJ investigation and its acquisition was made less certain, share prices dropped substantially, which caused investors significant harm, according to the lawsuit.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or email@example.com.