Guidant Shares Close Tuesday At $56.53 As Market Shock Fibrillates.
COLCHESTER, Conn., November13, 2005- LAWFUEL – The Law News Network – Scott + Scott, LLC, (http://www.scott-scott.com), which filed the first securities case in the United States District Court for the Southern District of Indiana against Guidant Corporation (NYSE: GDT) due to its alleged equipment failure and significantly belated notification to physicians, watched its stock tumble more than 11% in August as Johnson & Johnson indicated it was getting cold feet as to the terms of its approaching purchase of the defibrillator manufacturer. Scott + Scott filed the first securities fraud case against Guidant on June 24, 2005 (1:05-cv-0951-JDT-TAB).
Many people with implanted Guidant devices and shareholders have contacted the firm. Any person affected by the drop in share price, a faulty Guidant device or a decedent’s survivor may contact Scott + Scott directly. If you would like additional information, please contact the firm at 800/404-7770 before noon EST and thereafter, 800/332-2259 during office hours. You may also contact attorney Neil Rothstein directly 619/251-0887. Scott + Scott has offices in Connecticut, Ohio and California. The firm specializes in complex litigation including securities fraud and represents foundations, individuals, corporations and pension funds worldwide.
According to the Financial Times in August, Robert Darretta, J&J’s vice-chairman and finance chief, said: “We are continuing to consider the alternatives under our merger agreement.” In an article written by Barry Meier on August 6, 2005, information sought by the New York Times concerned the Guidant Ventak Prizm 2 DR, which the Company produced thousands of from 2000-2002. Some of these devices had electrical flaws that caused them to short-circuit. While Guidant claims to have discovered the problem in 2002, Scott + Scott has information that it may have known this issue existed in 2001, thus making the hidden truth, known to defendants, more significant.
On August 8, 2005, the Washington Times issued an article entitled “Law Firm Questions Defibrillator Recall” written by Steve Mitchell, Medical Correspondent. He quoted Scott + Scott, LLC’s Neil Rothstein: “Did the Guidant equipment work? The answer is, yes, some of it did. Did they perhaps not tell the truth about the percentage that did not work? Perhaps they did not. Did they disclose the problems in a timely manner? No they did not. Three years is not a timely manner. Waiting for a man to die is not a timely manner.”
On November 3, 2005, Scott + Scott filed an updated complaint. This complaint alleges that On December 15, 2004, Guidant Corp. entered into a $24.5 billion merger deal with Johnson & Johnson. While the Company pointed to its defibrillator business as a key component of that deal, it concealed from investors significant unaddressed product defect and liability issues of the Company’s implantable defibrillator product lines.
On June 17, 2005, the U.S. Food & Drug Administration (“FDA”) issued a nationwide recall notification impacting Guidant’s implantable defibrillators and cardiac resynchronization therapy defibrillators. Within that notification, the FDA advised the public that the malfunction of Guidant’s devices could lead to a serious, life-threatening event for a patient. On July 18, 2005, the FDA published a “Recall – Firm Press Release” on its website, that now revealed the Company’s knowledge of pacemaker-related defects. In the recall publication, Guidant warned physicians and patients to seek replacement of at least nine different cardiac pacemaker models and product lines.
Johnson & Johnson representatives subsequently revealed to the investment community that, as of October 18, 2005, it was seeking alternatives to the merger deal in earnest, as a direct result of the “developments” at Guidant. On November 2, 2005, Johnson & Johnson warned that it might withdraw from the merger deal due to broad product recalls and a regulatory agency investigation. Finally, on November 3, 2005, the Attorney General of the State of New York filed a complaint, alleging “repeated and persistent fraud” by the Company in connection with its defibrillator sales. As investors learned the truth about the allegations of fraud made by the State of New York, the Company’s shares tumbled from $60.40 on November 2, 2005, to as low as $57.05 per share in heavy trading.
Insider trading is now calculated at over $60 million. Moreover, the Wall Street Journal has reported that the chief medical officer of Guidant sold more than $3 million of her shares in May, just prior to the Company’s announcement to doctors of malfunctions in their defibrillators. This came near the time of Johnson & Johnson’s buyout of Guidant for about $25 billion. On July 19, 2005, Johnson & Johnson gave little guidance on the status of its acquisition of Guidant during a conference call. Johnson & Johnson management later said that the scheduled merger with Guidant might be delayed because of issues relating to that company’s recent product recalls. The deal was then slated to close during the third quarter, but Johnson & Johnson said that the recalls may slow that schedule, and no longer promised a third quarter close. Further, the insider trading at Guidant indicates that those who did trade were not waiting for the buyout.
If you purchased Guidant securities since 2001 or at any other time and have questions, please contact Scott + Scott to learn your legal rights, to discuss the matter with an attorney and to discover the many advantages of Scott + Scott’s representation. Anyone who was harmed by a Guidant device can also contact the firm. There is no charge or Scott + Scott, LLC works on a contingency basis and fees and costs must be approved by the Court out of any recovery. Please visit our website for information on other cases currently being litigated and/or worked on by the firm: Novelis, Refco, Boston Scientific, Honeywell, International Rectifier, Guidant and more.