Amended Complaint Merges Medicis Investors' Claims

Amended Complaint Merges Medicis Investors' Claims - 5/19/2009 , Class Action News, Class Action, Securities News, shareholder class action, claim, litigation, securities action, common stock'>

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Amended Complaint Merges Medicis Investors' Claims
Erin Marie Daly

Securities Law 360. May 19, 2009
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EXCERPT: A legal battle launched against Medicis Pharmaceutical Corp. last year has expanded with the filing of a consolidated amended complaint, which merges proposed class action claims from a slew of investors that accuse the dermatological-drug maker and several of its executives of overstating profits for more than four years. The latest version of the complaint, filed Monday in the U.S. District Court for the District of Arizona, alleges that the defendants issued materially false and misleading statements that eventually caused a one-day drop in the company's stock price, wiping out approximately $125 million of shareholder equity. Medicis was first hit with a series of three separate securities class action complaints by investors in October, shortly after it disclosed that it would be restating its financial results for 2003 through 2007 and the first and second quarters of 2008. The court consolidated the three cases in March, appointing Steven Rand as lead plaintiff, Pomerantz Haudek Block Grossman & Gross LLP as lead counsel, and Martin & Bonnett PLLC as liaison counsel for Rand. At the time, the parties agreed to give the plaintiffs until May to file a consolidated amended complaint in light of those developments. In their latest filing, the plaintiffs say they seek to represent all persons who purchased or sold Medicis common stock between Oct. 30, 2003, and Sept. 23, 2008. Medicis sells prescription acne products and other products primarily to large wholesale pharmaceutical distributors, which in turn distribute the products to the pharmacies that fill prescriptions and sell the products to consumers. According to the plaintiffs, in order to induce distributors to purchase greater quantities of Medicis products than they needed, the company offered them extremely generous return policies. […] Although Medicis was required to book reserves for anticipated returns, and deduct these reserves from revenues, the plaintiffs say, it chose not to.

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