The original Complaint charges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing a series of press releases and public filings disclosing significant sales growth in Syncor's international business, but omitting mention of certain allegedly improper payments to Syncor's foreign customers, thereby artificially inflating the price of Syncor's common stock.
The press releases and SEC filings that were allegally false and misleading are: April 25, 2001, press release, the March 31, 2001 Form10-Q, July 24, 2001 press release, June 30, 2001 Form 10-Q, October 24, 2001 press release, September 30, 2001 Form 10-Q, February 20, 2002 press release, 2001 10-K, April 24, 2002 press release, March 31, 2002 Form 10-Q, July 30, 2002,press release, October 11, 2002 press release.
Specifically, the Complaint alleges that the press releases and public filings were materially false and misleading because they failed to disclose that throughout the Class Period, the Company's Chairman of the Board and the director of its Asian division were making illegal payments to Syncor's overseas customers. Before the market opened on November 6, 2002, the Company shocked the market by announcing that it was conducting an internal investigation into illegal payments to its overseas customers and had contacted the Justice Department and the Securities Exchange Commission, and that its previously announced acquisition by Cardinal Health, Inc. was in doubt. As a result of this news, Syncor's stock price dropped sharply in pre-market trading to $22.50 per share, down $13.42 per share from its previous closing price of $35.92, and NASDAQ halted trading of Syncor's stock pending a satisfactory response to its request for additional information from the Company. When trading resumed the price of Syncor's stock dropped $8.52 to $27.
On November 13, 2002, Plaintiffs filed this action on behalf of purchasers of Syncor International Corporation (“Syncor” or the “Company”) publicly traded securities during the period from March 9, 1998 to November 5, 2002 (the “Class Period”), alleging violations of the federal securities laws against Syncor, which manufactured radioactive compounds used in medical imaging procedures, Monty Fu, Funari, and Bagerdjian, as well as certain other defendants.
Court-appointed lead plaintiffs filed a consolidated amended complaint, which was dismissed without prejudice. Plaintiffs filed a second amended consolidated complaint and on July 6, 2004 the court dismissed certain defendants with prejudice and granted leave to amend as to other defendants. On January 4, 2005, plaintiffs filed a third amended consolidated complaint (“TAC” or “Complaint”) which alleged that from 1995 through 1997, Syncor’s stock remained between $6 and $7. Plaintiffs alleged that defendants began making illegal payments to foreign officials to increase international sales and on March 9, 1998 began disseminating extremely positive statements falsely attributing the increased sales to legitimate business practices to push Syncor’s stock price to much higher levels.
The district court dismissed the TAC without leave to amend on April 15, 2005. Plaintiffs timely appealed on May 11, 2005. On June 12, 2007, the Ninth Circuit reversed in part and remanded which reinstated the case against the Company and the top executives. The Court affirmed the dismissal of the directors. On June 27, 2007, defendants filed a petition for rehearing. On October 9, 2007, the Ninth Circuit amended its order and denied the petition for rehearing. On October 18, 2007, the Ninth Circuit issued the mandate to the district court and on October 22, 2007, Defendants filed a petition for rehearing en banc. On October 30, 2007, the Ninth Circuit amended the order filed on October 9, 2007 to include that no further petitions for panel rehearing or petitions for rehearing en banc shall be entertained. The petition for rehearing en banc was deemed moot.
On August 27, 2008, a Stipulation of Settlement was filed, establishing a proposed settlement in the amount of $15,000,000 in cash. On September 22, 2008, the Court preliminarily approved the settlement.
On December 1, 2008, an Amended Stipulation for Settlement was filed by the Lead Plaintiff. On December 3, 2008, the Court issued the Final Judgment and Order of Dismissal with Prejudice. The settlement was approved and the complaint was dismissed with prejudice.
On April 6, 2009, the plaintiffs' counsels were awarded attorneys' fees and expenses.