MT. PLEASANT, SC - On Feb. 27, 2013, the U.S. Supreme Court ruled in Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds that plaintiffs do not need to prove the materiality of a defendant's false statements at the class certification stage of a securities fraud case.
Motley Rice securities attorneys William Narwold and Ann Ritter contributed to an amicus curiae (literally, a "friend of the Court") brief that was filed by Public Justice, P.C. In their brief, Public Justice and Motley Rice documented systemic fraud within the pharmaceutical industry and noted how the industry is now the number one defrauder of the federal government as measured by payments made for False Claims Act violations. Consequently, investors need the protection of the securities laws and class action mechanism to discourage such wrongdoing.
The plaintiffs in the case alleged that Amgen misrepresented the safety of its anti-anemia drugs, Aranesp and Epogen, at the same time clinical trial data suggested that the drugs could harm the patients who were taking them. In response, Amgen argued that the plaintiffs could not show that the company's misrepresentations had a material effect on the price of its stock. Justice Ginsburg, the author of the Court's majority decision, held that, although the plaintiffs would ultimately need to prove the materiality of the misstatements at trial, they did not need to demonstrate such proof in order for the case to proceed as a class action.
"Because of the importance of class actions as the most effective way for investors to recover in securities fraud cases, the decision could have eviscerated investors' principal opportunity to recover their losses had Amgen's argument that investors needed to prove the materiality of the misstatements at class certification been accepted," said Narwold.
Motley Rice attorney Vince Parrett tracked the case throughout the Supreme Court's proceedings. To read Parrett's analysis of the case, please visit the Motley Rice Blog.
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