Pharma major Dr Reddy’s Laboratories said in a statement on Wednesday that it has been served a securities class action lawsuit in the US for alleged violations of federal securities laws. The lawsuit filed at the District Court for New Jersey seeks damages to compensate the class of investors for a ‘purported decline’ in the company’s share price allegedly caused by the misstatements or omissions. The company added that it intends to contest the case. “US Securities class action lawsuit has been served on the company in the US by the lead plaintiff,” Dr Reddy’s said in a filing to the BSE. “The company believes that the asserted claims are without merit and intends to vigorously defend itself against the allegation,” the company added.
The lawsuit represented a class of investors who had purchased or otherwise acquired the company’s publicly traded shares on the New York Stock Exchange between June 15, 2015, and August 10, 2017. Earlier in August, with regard to the lawsuit the company had said, “On August 25, 2017, a law firm representing a purported investor in the company filed a purported class action lawsuit against the company, its CEO and CFO in the US District Court for the District of New Jersey alleging violation of the US federal securities laws.” The lawsuit alleged that the company made materially false and or misleading statements or omissions in connection with its corporate quality system, it had added.
The allegation is specifically in connection with a warning letter from the USFDA dated November 6, 2015 and a letter from Regierung von Oberbayern in Germany, dated August 10, 2017, Dr Reddy’s said. Besides, Kahn Swick & Foti, (KSF) and KSF partner and Rosen Law Firm, two global investor rights law firm, had also filed class action suits. According to the lawsuit, Dr Reddy’s lacked an effective corporate quality system, and defendants’ public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims, investors suffered damages. On Wednesday, shares of Dr Reddy’s Laboratories closed down 0.53% at Rs 2,276.05 each on the BSE.