A New Jersey mutual fund shop is the latest to take the so-called "Pharmaceutical Enron" to court, and they're tripling the ante.
Last Wednesday 15 Lord Abbett
] mutual funds, represented by John Azzarello
of Whipple Azzarello
, sued Valeant Pharmaceuticals
(as well as PricewaterhouseCoopers, Valeant's auditor, and former Valeant top dogs J. Michael Pearson, Howard Schiller, Robert Rosiello, and Tanya Carro) for eight counts, including racketeering and fraud. The 162-page complaint
was filed in the U.S. District Court for the District of New Jersey. (Lord Abbett is based in Jersey City, and Laval, Quebec-based Valeant's U.S. headquarters is in Bridgewater, New Jersey.)
Greg Farrell and Neil Weinberg of Bloomberg covered
the new lawsuit.
Lord Abbett is not the first fund firm to attack Valeant in court. TIAA filed suit in 2015, and T. Rowe Price
did so in 2016. And RCF's then-chief retired
after its flagship mutual fund took a big performance hit
thanks to its Valeant holdings.
The Lord Abbett suit against Valeant is different, Bloomberg
argues, from a host of suits against Valeant, because the fund firm is trying to bring the weight of New Jersey's racketeer influenced and corrupt organizations (RICO) law to bear against Valeant. That law would allow the Lord Abbett funds to seek a penalty three times their alleged losses in Valeant. And the way their complaint reads, investors (including the Lord Abbett funds) lost a combined $80 billion thanks to Valeant's fall from stock market grace.
"The fallout from the unmasking of Valeant's fraudulent scheme has been devastating," the complaint reads. And this lawsuit could bring that devastation back to Valeant three-fold.
Neil Anderson, Managing Editor
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