The original complaint charges Inyx and certain of its officers and directors, among others, with violations of the Securities Exchange Act of 1934. Inyx is a pharmaceutical company that develops and manufactures prescription and over-the-counter pharmaceutical products. The Company has operating subsidiaries in the United States and the United Kingdom.
The complaint alleges that, during the Class Period, defendants made numerous statements about the Company's financial performance in both its public statements and in the filings that it made with the Securities and Exchange Commission. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose: (i) that the Company was materially overstating its assets and revenues by creating false sales invoices, as these invoices were
created before the items were billable and had not actually been issued to customers; (ii) that the Company was not following its publicly stated accounting policies; and (iii) as a result of the foregoing, the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles and were therefore materially false and misleading.
On July 2, 2007, after the market opened for trading, news services carried a report that Inyx had filed for Chapter 11 protection in the U.S. Bankruptcy Court in Delaware. In response to this announcement, the price of Inyx common stock plummeted, falling from $2.44 per share on June 29, 2007 to a low as $0.30 per share in intra-day trading on July 2, 2007, on extremely heavy trading volume
of more than 7.7 million shares.
On November 8, 2008, an Order Appointing Lead Plaintiff; And Approving Proposed Lead Plaintiff's Choice Of Counsel was filed with the court. On March 10, 2009, a Consolidated Amended Class Action Complaint For Violations Of The Federal Securities Laws was filed with the court. On June 19, 2009, the defendants filed motions to dismiss the Consolidated Amended Class Action Complaint.
On March 01, 2010, a memorandum and order was entered, setting forth in said Order, defendant's motion to dismiss was granted in part and denied in part.
The Court released an order on May 5, 2011, denying plaintiff’s motion for summary judgment without prejudice. The plaintiff’s argued for summary judgment against the individual defendant as a “controlling person” under Section 20(a) of the Exchange Action. However, the Court held summary judgment as premature prior to the May 25, 2011, deadline for discovery. This order emphasized the defendant’s assertions that further discovery would demonstrate evidence against its control of the company.
In dictum, the Court also noted that it would not apply a previously entered default judgment against the company defendant to the individual defendant. Since the default judgment did not adjudicate the merits of the claim, the Court reasoned that it could not apply the order against the individual defendant. Further, the plaintiff can prove the primary violation for Section 20(a) purposes by the company in later proceedings.
On July 5, 2011, the Court issued an order certifying the class as proposed by the lead plaintiff, David S. Lenington, and approving of class counsel, Bower Piven, P.C. The class is defined as those who purchased the defendant’s securities between April 1, 2005 and July 2, 2007.
On October 28, 2011, the United States Court of Appeals for the Second Circuit denied the appellant's motion to stay the District Court proceedings while it appealed the July 5, 2011, Order because the appellant did not demonstrate exceptional circumstances to warrant such relief.