On February 4, 2019 a jury in the USDC California (Central) found that Puma Biotechnology and its Chief Executive Officer, Alan H. Auerbach, knowingly violated Sections 10(b) and 20 (a) of the Securities Exchange Act of 1934. Specifically, the company and its CEO made false and misleading statements about the efficacy of Puma’s drug, Neratinib. As a direct result of this fraudulent conduct, the jury specifically declared that Puma’s stock price was artificially inflated by $4.50 per share from July 22, 2014 through May 13, 2015.
Earlier this month, following a thorough analysis of investor data, a Court-appointed claims administrator, Gilardi & Co., confirmed the acceptance of 4,600 claims from damaged shareholders – including both institutional and individual investors. The claim forms identified 11.3 million shares of Puma Biotechnology common stock were damaged as a result of defendants’ fraudulent conduct. The total damages to be recovered by eligible shareholders will exceed $55 million.
The law firm of Robbins Geller Rudman & Dowd represented investors. Attorney Jason Forge of Robbins Geller, who led the trial team on behalf of Lead Plaintiff Norfolk Pension Fund, recently stated “Puma seems no more able to change its culture than a tiger can change its stripes. After spending tens of millions of dollars on an army of lawyers, a jury unanimously found that Puma and Alan Auerbach committed fraud, and now they have to pay far more than what they told investors this defeat would cost.”
A jury verdict in a securities class action case is incredibly uncommon – as almost all complaints are either settled out of court when plaintiffs and defendants agree to a monetary amount… or the case is dismissed by the court (a third occurrence can include a case being voluntarily withdrawn). Since the Private Securities Litigation Reform Act (PSLRA) was passed by Congress in 1995, it is believed that this Puma verdict is only the 14th class action to result in a bench decision or jury verdict. The last such class action occurred in 2015 against Longtop Financial Technologies Limited. This action took place in the Southern District of New York and resulted in a relatively small $2.3 million payout to damaged investors.
By Jeff Lubitz, Executive Director, ISS Securities Class Action Services