A class-action lawsuit has been filed against Teva Pharmaceutical Industries in New York federal court on behalf of shareholders who claim that company executives misrepresented Teva’s financial state.
The class-action covers shareholders who bought company stock between January 1, 2012 and October 29, 2013. The lawsuit claims that the share price paid by shareholders during that period was inflated because Teva executives provided inaccurate and misleading information regarding the state of the company and its future prospects. It also claims that the dispute over the company’s retrenchment plan between its board and senior management during the period in question was not properly disclosed to investors, which also kept the share price higher than it should have been. The plan, announced on October was supposed to generate $1.5 billion-$2 billion in savings for the company until 2018, but provoked much controversy in Israel due to its inclusion of local layoffs.
On October 30, Teva announced that CEO Jeremy Levin consented to leave the company following a disagreement with company chairman Phillip Frost. The company’s stock price fell 8% following the announcement.
The lawsuit specifically mentioned a news broadcast that aired October 28 in Israel that presented a letter from a Teva executive in which he maintained that the conflict between the board and Levin was impeding the implementation of the company’s retrenchment plan. The broadcast also quoted anonymous sources saying that Levin was considering resigning from his position. A short while later, Levin denied those rumors and released a statement saying reports of any conflict between him and Frost were baseless. Two days later, Teva announced that Levin would be concluding his tenure as CEO.
The lawsuit was filed by the U.S. law offices of Rigordsky & Long.