St. Jude Medical Securities Class Action Lawsuit

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St. Jude Medical Securities Class Action Lawsuit

By Andrea Gressman

On December 10, 2012, a securities class action lawsuit was filed in the U.S. District Court in the District of Minnesota. The securities lawsuit was filed by the shareholders who obtained St. Jude Medical, Inc.’s (NYSE: STJ) publicly-traded common stock between the dates of October 19, 2011 and November 20, 2012.

The St. Jude securities class action lawsuit claims that St. Jude and some of its officers violated parts of Sections of the Securities Exchange Act of 1934. The securities lawsuit goes on to claims that the company made both misleading and false statements and also concealed important information that related to the durability, safety and the manufacturing of St. Jude’s cardiac rhythm management lead wires that they sell and market under the name “Durata.”

St. Jude is a medical device company that provides medical equipment around the world. It currently manufactures as well as markets cardiac rhythm management systems. These devices rely on insulated leads, which include the Durata leads. The St. Jude securities lawsuit claims that St. Jude concealed a number of very important details to the shareholders. These included the following:

The Durata leads had similar if not the same flaws as in the original design as the company’s earlier version.
St. Jude’s design of the product, testing of the product as well as the overall quality control of the product was so significantly flawed that the products actually posed a risk to the patients who used the medical device.
Because of the items listed above the company vacated the right to claim that the development of the items was successful as they did.

Finally, through a series of disclosures, St. Jude revealed the truth about the Durata leads. Before the market opened on October 17, 2012, St. Jude had a conference call with their investors in which they discussed the possibility of the United States Food and Drug Administration (FDA) issuing an advisory action due to the inspections of their facility in Sylmar, California. Because of this news the stock ended up dropping $2 per share, which equaled 4.87% and ended up closing at $40.85 the same day as the conference call.

Just one week later on October 24, 2012, St. Jude went on to file a Current Report on Form 8-K after the markets had closed with the United States Securities and Exchange Commission regarding the inspections by the FDA. They provided a description of the inspections results and were quoted in saying, “none of the observations identified a specific issue regarding the clinical or field performance of any particular device.” From there, the stock continued to fall another $1.44 to a per share price of $38.27.

However, on November 20, 2012 the FDA made public its own account of the inspection upon the Sylmar facility and it differed from the version St. Jude had provided. They were very specific in the concerns that they had after their inspection, including the production, design, and quality control of the Durata leads. From there St. Jude’s stock fell $4.34 per share and finally closed at $31.37 per share the following day.

If you or someone you know has suffered a stock fraud or securities fraud, please visit the Securities Fraud, Stock Fraud Investment Class Action Lawsuit Investigation page to learn more about your legal rights from a securities lawsuit lawyer. Provide your information and receive a free legal review.

Updated January 9th, 2013

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