Guidant Corporation designs and manufactures cardiovascular medical products such as pacemakers, defibrillators and stents. The Company products focus on the treatment of cardiac arrhythmias, heart failure, and coronary and peripheral disease, including implantable defibrillator systems. The implantable defibrillator systems are used to detect and treat abnormally fast heart rhythms that could result in sudden cardiac death.

The Complaint charges Guidant and certain of its officers and directors with violations of the Securities Exchange Act of 1934. On December 15, 2004, Guidant management 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, the Complaint alleges, it concealed from investors significant un-addressed product defect and liability issues of the Company's implantable defibrillator product lines. Although life-threatening, Defendants knew or consciously disregarded the fact that these mechanical problems were difficult to characterize and observe in implanted patients, making unlikely that any temporary physical disablement in patients would be attributed to device malfunction.

On June 17, 2005, the FDA issued a nationwide recall notification, impacting Guidant's implantable defibrillators and cardiac resynchronization therapy defibrillators. Within that notification, FDA advised the public that the malfunction of Guidant's devices could lead to a serious, life-threatening event for a patient. On this news, the Company's shares fell $3.36, losing 4.5% percent of their value over the two trading days following the FDA recall, closing at $70.33, on a combined volume of over 25 million shares. As a result, Guidant investors lost over $1.09 billion in the value of their shares as a result of the surprise announcement of the FDA recall. Guidant's stock price closed today at $63.90 on tremendous volume exceeding 49 million shares on further news and Company warnings concerning problems with another of Guidant's implantable heart devices.

The Complaint alleges that during the Class Period, Guidant knew and concealed: (1) the serious health issues encountered by patients caused by the malfunctioning and defective nature of the defective devices; (2) the overwhelming threat to the deal Guidant had forged with Johnson & Johnson for the sale of the Company, including the threat to the ability of insiders to profit as a result of stock sales during the Class Period; (3) the lack and insufficiency of communications to healthcare providers and patients regarding the defective nature of the Company's defibrillator products, even when adequate communications were essential to protect the lives of its implant patients; and (4) the troubling decision to await overwhelming negative media accounts before taking affirmative actions regarding the Company's defibrillator products.

According to the Company’s Form 10-Q for the quarterly period ended September 30, 2005, beginning in late June 2005, four securities class action Complaints were filed on behalf of Company shareholders in the United States District Court for the Southern District of Indiana, against the Company and several of its officers. The Complaints allege that the Defendants concealed adverse information about the Company’s defibrillators and sold stock in violation of federal securities laws. The Complaints seek class certification, monetary damages, and injunctive relief. On October 24, 2005, these Complaints were voluntarily dismissed without prejudice.