Faruqi & Faruqi, LLP Wins Historic Appeal in Fourth Circuit
In a significant victory on behalf of investors in biopharmaceutical company, ChelseaTherapeutics, International Ltd., on March 16, 2015, the United States Court of Appeals for the Fourth Circuit determined that the claims should be remanded for further proceedings because they had been erroneously dismissed by the district court. This was the first successful appeal of a securities fraud class action in the Fourth Circuit since the enactment of the Private Securities Litigation Reform Act in 1995.
The claims alleged that the company and certain officers and directors violated the federal securities laws by intentionally concealing communications with the U.S. Food and Drug Administration concerning the likelihood of approval of the company’s sole product candidate.
The circuit court held that “the district court erred in taking judicial notice of the challenged documents filed with the SEC, because those documents did not relate to the contents of the complaint[,]” and that “based on the defendants’ failure to disclose critical information about the weaknesses of the new drug application, the plaintiffs’ allegations were sufficient to support a strong inference of scienter.”
Upon remand, the district court denied the defendants’ motion to dismiss and permitted the case to proceed to discovery.
About Faruqi & Faruqi, LLP
Faruqi & Faruqifocuses on complex civil litigation: including securities: antitrust; wage and hour; and consumer class actions as well as shareholder. The firm is headquartered in New York, andmaintains offices in California, Delaware and Pennsylvania. Since its founding in 1995, Faruqi &Faruqi has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, consumers andemployees.
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Megan M. Sullivan is a Senior Associate in Faruqi & Faruqi, LLP’s New York office and focuses her practice on securities litigation, representing plaintiffs in federal securities fraud class actions. Her successes include securing lucrative settlements in five securities class actions in the past two years alone. Please feel free to contact Megan regarding any questions concerning this blog post or any questions related to F&F’s practice areas.