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Class Action Lawsuit Filed Against Schein Pharmaceutical for Securities Law Violations

Strategic Insights

— 1 min read

A class action lawsuit has been commenced against Schein Pharmaceutical, Inc. on behalf of all individuals who purchased the company's common stock in its initial public offering on April 9, 1998. The lawsuit claims that Schein and other defendants violated securities laws by making material misstatements and omissions in the company's registration statement and prospectus. The complaint alleges that Schein failed to comply with current Good Manufacturing Practices at its Phoenix-based Steris facility, posing significant risks to the company's products and overall sales and profits. The lawsuit follows a September 10, 1998, announcement by Schein that the FDA had seized all products made by the Steris plant due to non-compliance with FDA regulations.

Key Takeaways:

  • The lawsuit alleges that Schein made material misstatements and omissions in its registration statement and prospectus regarding the company's failure to comply with cGMP at its Steris facility.
  • The complaint claims that Schein misrepresented its manufacturing process as being in material compliance with the FDA's cGMP standards.
  • Schein's stock price plummeted 53% to $11.6875 per share after the company announced the FDA seizure of its products due to non-compliance.
  • The lawsuit seeks damages on behalf of all class members and is represented by Beatie and Osborn LLP.
  • A representative plaintiff must meet certain legal standards to serve as a lead plaintiff in the case.
  • Class members must contact Kevin M. McGee, Esq. of Beatie and Osborn LLP by November 26, 1998, to be included in the list of class members.

Statistics:

  • 40% of Schein's revenues and 50% of its gross profits came from its Phoenix-based Steris plant.
  • Schein's stock price dropped by 53% to $11.6875 per share on heavy volume after the FDA seized its products.
  • The lawsuit claims that Schein's failure to comply with cGMP standards posed significant risks to its products and overall sales and profits.

Sources:

  • Beatie and Osborn LLP (www.prnewswire.com)

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