Zimmerman Reed, PLLP announced that securities fraud action against Boston Scientific Corporation (Boston Scientific), a US based medical device company, will be allowed to proceed as a class action. On March 10, 2009 Judge Douglas Woodlock, US District Court for the District of Massachusetts, issued a memorandum certifying a shareholder class of all persons who purchased or otherwise acquired Boston Scientific equity securities between November 20, 2003 and July 15, 2004
At the core of the class action law suit are allegations concerning known manufacturing defects with Boston Scientific’s flagship stent product, TAXUS drug-eluting stent. In their class action law suit, the investors allege that Boston Scientific violated the Securities Exchange Act of 1934 by knowingly withholding material information and making misleading statements concerning TAXUS, which artificially inflated the company’s stock and ultimately caused investor losses. In addition, the investors allege that the company’s top executives engaged in improper insider trading and wrongfully enriched themselves in excess of $332 million by selling their personal holdings.
The case involves allegations that in 2003 and 2004, medical device-manufacturer Boston Scientific misled investors about its TAXUS device. First, Defendants attributed problems-including patient deaths-with its drug-eluting TAXUS stent and Express2 bare metal coronary stent systems to physician error, despite the fact that the company had previously determined that the problems were attributable to its internal manufacturing processes. Further, Plaintiffs allege that, despite knowing the serious risks associated with the manufacturing problems, the company chose to delay implementing manufacturing changes until after it launched the flawed device onto the US market, to avoid further FDA scrutiny of the company’s application to put TAXUS on the US market. The problems caught up with the company when it was forced to recall TAXUS from the US and international markets three times in the summer of 2004. In reaction, the share price dropped 14.3% in the following three trading days.