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Sequenom, Inc. Summary: According to the Form 10-K for the fiscal year ended December 31, 2003, in October 2002, the defendants were dismissed without prejudice pursuant to a stipulated dismissal and tolling agreement with the plaintiffs. In February 2003, the court dismissed the claim against the defendants brought under Section 10(b) of the Securities Exchange Act of 1934, without giving the plaintiffs leave to amend the complaint with respect to that claim. The court declined to dismiss the claim against the defendants brought under Section 11 of the Securities Act of 1933. Furthermore, in June 2003, the defendants approved in principle a settlement offer by the plaintiffs. In September 2003, in connection with the possible settlement, the defendants who had entered into tolling agreements with plaintiffs agreed to extend those agreements so that they would not expire prior to any settlement being finalized. The settlement remains subject to a number of procedural conditions, as well as formal approval by the Court.
According to a Press Release dated December 3, 2001, the lawsuit asserts claims under Section 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated by the SEC thereunder and seeks to recover damages. The complaint alleges that Sequenom and certain of its officers and directors at the time of its IPO violated the federal securities laws by issuing and selling Sequenom common stock pursuant to the initial public offering without disclosing to investors that several of the underwriters of the IPO had solicited and received excessive and undisclosed commissions from certain investors. In exchange for the excessive commissions, the complaint alleges, defendants allocated Sequenom shares to customers at the IPO price of $26.00 per share. To receive the allocations (i.e., the ability to purchase shares) at $26.00, the defendant underwriters' brokerage customers had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Sequenom stock rocketed upward (a practice known on Wall Street as 'laddering') was intended to (and did) drive Sequenom's share price up to artificially high levels. This artificial price inflation, the complaint alleges, enabled both the defendant underwriters and their customers to reap enormous profits by buying Sequenom stock at the $26.00 IPO price and then selling it later for a profit at inflated aftermarket prices, which rose as high as $99.75 during its first day of trading. Rather than allowing their customers to keep their profits from the IPO, the complaint alleges, the defendant underwriters required their customers to 'kick back' some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because the Prospectus distributed to investors and the Registration Statement filed with the SEC in order to gain regulatory approval for the Sequenom offering contained material misstatements regarding the commissions that the underwriters would derive from the IPO and failed to disclose the additional commissions and 'laddering' scheme discussed above.
INDUSTRY CLASSIFICATION:
SIC Code: 8731
Sector: Healthcare
Industry: Biotechnology & Drugs
| COMPANY/ISSUER NAME: | Sequenom, Inc. |
| COMPANY/ISSUER TICKER: | SQNM |
| COMPANY WEBSITE: | http://www.sequenom.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Collegeware USA, Inc. v. Sequenom, Inc., et al. | |||||||||||||||||
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REFERENCE COMPLAINT | |||||||||||||||||
| In Re Sequenom, Inc. Initial Public Offering Securities Litigation | |||||||||||||||||
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| DOCUMENTS FOR THE REFERENCE COMPLAINT | |||
| Amended Class Action Complaint For Violations Of The Federal Securities Laws | |||
| Type: Complaint | Date on the document: 04/19/2002 | ||
| US District Court Civil Docket | |||
| Type: Docket | Date on the document: 07/29/2003 | ||
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