According to a press release dated April 09, 2010, the complaint alleges that during the Class Period, defendants made materially false and misleading statements regarding BSX’s business and prospects. Specifically, defendants’ statements to investors during the Class Period misrepresented existing facts known to defendants or recklessly disregarded by them, or omitted to disclose facts defendants knew or disregarded that were necessary to make the statements made not misleading to investors, including the following: (a) sales and demand for the Company’s CRM products had been substantially and materially inflated by the payment of illegal and improper inducements to health care professionals; (b) a material portion of the Company’s CRM reported or anticipated revenues resulted from the sale of products which had been manufactured without required FDA approval, such that they were subject to recall and refund or replacement; (c) demand for the Company’s CRM products had weakened due to the curtailment and cessation of payments of illegal and improper inducements to health care professionals, which defendants attributed to other factors; and (d) defendants failed to timely or fully disclose the problems and defects in the headers of certain of the Company’s ICD products such that defendants’ statements about CRM sales in general and sales of ICDs in particular were materially misleading.
On March 15, 2010, before the market opened, BSX announced that it was suspending sales of and was recalling all of its ICD and CRT-D devices because it had changed the manufacturing process for the devices without obtaining FDA approval. On this news, BSX shares dropped 12.6%, to close at $6.80 per share, on volume of 243 million shares.
On July 13, 2010, Judge Patti B. Saris signed the Order appointing Steelworkers Pension Trust and KBC Asset Management NV as co-lead plaintiffs, and approved lead plaintiffs’ selection of Berger & Montague, P.C., and Motley Rice LLC as co-lead counsel. On September 14, 2010, the lead plaintiffs filed an Amended Complaint. The defendants responded by filing a motion to dismiss the Amended Complaint on December 27, 2010.
According to a news article dated September 20, 2011, a Massachusetts federal judge dismissed a securities fraud class action Monday alleging Boston Scientific Corp. didn’t disclose information about valuable employees fired for unethical sales practices, saying the biotech company seemed "diligent, rather than fraudulent or reckless" in its internal audits. U.S. District Judge Douglas P. Woodlock found the plaintiffs’ claims failed because they did not sufficiently prove that the defendants’ alleged misstatements and omissions were misleading, a standard they were required to meet under the Securities Litigation Uniform Standards Act.
On October 17, 2011, the plaintiff filed a Notice of Appeal. The appeal is currently pending in the United States Court of Appeals for the First Circuit.