Bradley Pharma Settles Securities Suit For $3.5M

Bradley Pharma Settles Securities Suit For $3.5M - 1/7/2009

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

Bradley Pharma Settles Securities Suit For $3.5M
Evan Weinberger

Securities Law 360. January 7, 2009
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EXCERPT: Shareholders of the former Bradley Pharmaceuticals Inc. have asked a federal judge to approve a $3.5 million settlement that closes the book on securities litigation that began in 2005. According to the settlement motion, filed Dec. 31 in the U.S. District Court for the District of New Jersey, negotiations on the settlement began when Bradley and the class agreed to mediation in June 2007. “The proposed settlement is the product of settlement negotiations that spanned over the course of one year and involved direct negotiations between the parties, two mediation sessions with former judges with extensive mediation experience and follow-up discussions after the second mediation session,” the motion for approval said. “Accordingly, there can be no doubt that the proposed settlement is the result of arm's-length negotiations.” The original complaints against Bradley Pharmaceuticals were filed in 2005. They grew out of a U.S. Securities and Exchange Commission investigation into an allegedly fraudulent transaction the company made to cover up lost revenues on its balance sheet. According to the settlement motion, Bradley, which was purchased by Nycomed US last February, made niche pharmaceutical products rather than blockbuster drugs. Much of Bradley's product line was in skin care and other dermatological therapies. Because of its business model, the settlement motion said, Bradley quickly lost market share when a less expensive generic product became available. Bradley allegedly engaged in a $1 million “sham sale” of Deconamine syrup, an antihistamine, to inflate its third-quarter 2004 income, the settlement motion said. Deconamine was a high enough margin product that a $1 million sale could generate upward of $600,000 in net income, the settlement motion said. The plaintiffs alleged that the customer that purchased the Deconamine quickly returned the shipment and received a credit for other items later purchased from Bradley, making the transaction fraudulent.

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