Glaxo Unit And Former CEO Win Lawsuit Over Alleged Fraud

A federal jury in Miami last week decided that Stiefel Laboratories and its former ceo, Charles Stiefel, did not commit securities fraud in connection with the sale of company stock prior to the $2.9 billion purchase of the family-owned business by GlaxoSmithKline in 2009 (here is the jury verdict form). The lawsuit, which was filed by former Stiefel cfo Richard Fried, was one of several in which former employees alleged that Stiefel stock was deliberately undervalued as part of a buyback through an employee stock plan prior to the sale to Glaxo (here is his lawsuit). As a result, the lawsuits claimed their holdings suffered by hundreds of millions of dollars. The US Securities and Exchange Commission also filed such a lawsuit and charged the Stiefel family purchased engineered stock buybacks from the employee plan at $13,000 and $16,500 a share between 2006 and 2009. At the time of the Glaxo sale, however, Stiefel was stock was valued at $68,000 a share, more than 300 percent higher than the price paid for buybacks. The SEC alleged that shareholders lost $110 million. Meanwhile, as late as March 16, 2009, Charles Stiefel ordered that ongoing negotiations with Glaxo (GSK) should not be disclosed to employees, and the SEC alleges that he misled shareholders to believe the company would remain family-owned, according to the SEC lawsuit (here is the SEC statement and lawsuit). The lawsuit filed by the SEC is on hold, however, while Stiefel appeals yet another lawsuit, according ...
Source: Pharmalot - Category: Pharma Commentators Authors: Source Type: blogs