The Detroit generic pharmaceutical maker Caraco Pharmaceutical Laboratories Ltd. (NYSE Amex: CPD) said Friday that two purported class action lawsuits had been filed against it in federal court in Detroit on July 17 and 23.
Caraco said neither the company or the executives had ot yet been served with either suit. But even without seeing them, Caraco said it believes the suits are "without merit" and that it intends to "vigorously contest the actions."
Caraco said the suits "purport to represent the class of persons who purchased or otherwise acquired the common stock of the Company generally between May 29, 2008 and June 25, 2009."
And the suits allege that Caraco and executives "violated federal securities laws, primarily related to public statements on FDA compliance."
A Los Angeles, Calif. law firm, Glancy Binkow & Goldberg LLP, also announced last week that it had filed one of the suits on behalf of those who bought Caraco pharmaceutical sbetween May 29, 2008 and June 25, 2009.
The firm said that suit "alleges that throughout the Class Period defendants knew or recklessly disregarded that their public statements concerning Caraco’s business, operations, and prospects were materially false and misleading."
Specifically, that means failure to disclose that it had failed to meet the United States Food and Drug Administration's current Good Manufacturing Practice (“cGMP”) requirements; that the company failed to take corrective measures in order to have its manufacturing facilities comply with the FDA’s cGMP requirements; that the company had failed to remedy repeat violations of FDA regulations previously observed and documented by the FDA; yhat the foregoing significantly jeopardized the Company’s ability to gain FDA approval of pending new drug applications; and as a result, that the company would have to recall certain products.
On June 25, the FDA announced that U.S. Marshals had seized drug products manufactured by Caraco from the company’s plants. According to the FDA, this action followed Caraco’s continued failure to meet the FDA’s cGMP requirements, which assure the quality of manufactured drugs. The FDA stated that through the seizure it sought to immediately stop the vompany from further distributing drugs until there is assurance that Caraco complies with good manufacturing requirements. On this news, shares of Caraco declined $1.79 per share, or approximately 43 percent, to close on June 25 at $2.39 per share, on unusually heavy volume.
Plaintiff seeks to recover damages on behalf of class members and is represented by Glancy Binkow & Goldberg LLP, a law firm with significant experience in prosecuting class actions, and substantial expertise in actions involving corporate fraud.
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