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Case Status:    DISMISSED    
On or around 08/02/2007 (Date of last review)

Filing Date: July 27, 2004

According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, in July 2004, a series of four purported class action lawsuits, now consolidated, were filed in the U.S.D.C. for the Northern District of Illinois, in connection with the company’s restatement of its consolidated financial statements, previously announced in July 2004, naming Baxter and its current Chief Executive Officer and then current Chief Financial Officer and their predecessors as defendants. The lawsuits allege that the defendants violated the federal securities laws by making false and misleading statements regarding the company’s financial results, which allegedly caused Baxter common stock to trade at inflated levels during the period between April 2001 and July 2004. As of August 2, 2007, the District Court had dismissed the last of the remaining actions and the matter remains in appeal.

The original complaint charges Baxter and certain of its officers with violations of the Securities Exchange Act of 1934. More specifically, the complaint alleges that during the Class Period defendants issued false and misleading statements concerning its business and financial condition. Specifically, defendants failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company’s financial results during the Class Period were materially overstated; (2) that the overstatement occurred because the Company improperly and “incorrectly” recognized $40 million in revenues and maintained inadequate and “incorrect” provisions for bad debts relating to its Brazilian operations; (3) that as a result of this, the Company’s financial results were in violation of Generally Accepted Accounting Principles (“GAAP”); (4) that the Company lacked adequate internal controls; and (5) that as a result of the above, the Company’s financial results, including its net income figures, were materially and artificially inflated at all relevant times.

The complaint further alleges that on July 22, 2004, Baxter announced that it planned to restate its financial results for the years 2001 through 2003, and for the first quarter of 2004. The restatement was primarily the result of incorrect revenue recognition and inadequate provisions for bad debts in Brazil during that period, which would result in a decrease in net income over the restatement period by an amount expected to be no more than $40 million, or $0.07 per diluted share. The restatement was expected to result in adjustments to sales over the period of an amount not more than $70 million, representing less than 0.5 percent of sales in any year. News of this shocked the market. Shares of Baxter fell $1.48 per share, or 4.59 percent, to close at $30.79 per share on unusually heavy trading volume.


Sector: Healthcare
Industry: Medical Equipment & Supplies
Headquarters: United States


Ticker Symbol: BAX
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data

"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: N.D. Illinois
DOCKET #: 04-CV-4909
JUDGE: Hon. William T. Hart
DATE FILED: 07/27/2004
CLASS PERIOD END: 07/21/2004
  1. Berger & Montague PC
  2. Bernstein Liebhard & Lifshitz, LLP (New York)
  3. Law Offices of Charles J. Piven, P.A.
  4. Miller Faucher Cafferty & Wexler, LLP
  5. Much Shelist Freed Denenberg Ament & Rubenstein, PC
  6. Pomerantz LLP (New York)
  7. Schatz & Nobel, P.C.
  8. Schiffrin & Barroway LLP
  9. Stull, Stull & Brody (New York)
No Document Title Filing Date
COURT: N.D. Illinois
DOCKET #: 04-CV-4909
JUDGE: Hon. William T. Hart
DATE FILED: 09/28/2005
CLASS PERIOD END: 07/21/2004
  1. Berger & Montague PC
    1622 Locust Street, Berger & Montague PC, PA 19103
    800.424.6690 215.875.4604 ·
  2. Glancy Binkow & Goldberg LLP (Los Angeles)
    1801 Ave. of the Stars, Suite 311, Glancy Binkow & Goldberg LLP (Los Angeles), CA 90067
    310.201.915 310. 201-916 ·
  3. Miller Faucher and Cafferty LLP
    30 North LaSalle Street, Miller Faucher and Cafferty LLP, IL 60602
    312.782.4880 ·
  4. Miller Shea, P.C.
    1301 W Long Lake Rd, Ste 135, Miller Shea, P.C., MI 48098
    248.267.8200 248.267.8200 ·
  5. Much Shelist Freed Denenberg Ament & Rubenstein, PC

    800-470-6824 312-621-1750 ·
  6. Pomerantz LLP (New York)
    600 Third Avenue, 20th Floor, Pomerantz LLP (New York), NY 10016
    212.661.1100 212.661.8665 ·
  7. Schiffrin, Craig & Barroway
    3 Bala Plaza, East, Suite 400, Schiffrin, Craig & Barroway, PA 19004
    610-667-7706 ·
No Document Title Filing Date
—Related District Court Filings Data is not available