Shareholder Class Action Filed Against SFBC International, Inc. by the Law Firm of Schiffrin & Barroway, LLP
11 Janvier 2006 - 12:00AM
PR Newswire (US)
RADNOR, Pa., Jan. 10 /PRNewswire/ -- The following statement was
issued today by the law firm of Schiffrin & Barroway, LLP:
Notice is hereby given that a class action lawsuit was filed in the
United States District Court for the District of New Jersey on
behalf of all securities purchasers of SFBC International, Inc.
(NASDAQ:SFCC) ("SFBC" or the "Company") from August 4, 2003 through
December 15, 2005, inclusive (the "Class Period"). If you wish to
discuss this action or have any questions concerning this notice or
your rights or interests with respect to these matters, please
contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or
Richard A. Maniskas, Esq.) toll-free at 1-888-299-7706 or
1-610-667-7706, or via e-mail at . The complaint charges SFBC and
certain of its officers and directors with violations of the
Securities Exchange Act of 1934. SFBC, a drug development services
company, provides a range of early- and late-stage clinical drug
development services to branded pharmaceutical, biotechnology,
generic drug, and medical devices companies worldwide. More
specifically, the Complaint alleges that the Company failed to
disclose and misrepresented the following material adverse facts
which were known to defendants or recklessly disregarded by them:
(1) that the Company engaged in improper and unseemly business
practices; (2) that the Company's financial health was a direct
result of its engagement in such practices; (3) that the defendants
masked its improper and unseemly business practices so that SFBC
could continue to report strong revenue, earnings, and tout its
ability to outperform competitors because of the large numbers of
participants its facilities could handle, and its ability to
quickly recruit participants for drug trials; (4) that the
defendants knew and/or recklessly disregarded the fact that if
SFBC's improper and irregular business practices were discovered
that it would have a material effect on the Company's financial
health, cause it to lose its credibility for accurate drug testing,
lose customers, and inhibit its ability to beat competitors and
quickly recruit large groups of participants, and expose the
Company to fines and possible lawsuits from victims of faulty
drugs; and (5) that at all relevant times, the Company lacked
adequate internal controls. On November 2, 2005, Bloomberg News
published an article entitled "Big Pharma's Shameful Secret." The
article summarized the results of an extensive investigation by
certain Bloomberg News reports regarding the safety of human drug
testing. The article centered its investigation on SFBC and
included statements from interviews with experts in the industry,
SFBC drug participants, and SFBC executives. The article revealed
that the Institutional Review Board ("IRB") that the Company
retained to oversee testing at SFBC facilities is owned by Alison
Shamblem, wife of defendant E. Cooper Shamblem, who is SFBC's vice
president of clinic operations. This conflict of interest was never
publicly disclosed. The article reported that, according to
interviews with SFBC participants from the Company's Miami, Florida
facility, participants were enrolled in back-to-back trials at
SFBC, without adhering to minimum waiting requirements. According
to the article, SFBC never contacted competing clinics to determine
if its participants were enrolled in more than one drug trial at
the same time. The article further stated that SFBC used coercive
payment schemes to decrease the chance that a participant would
report uncomfortable or adverse reactions to the drug. Bloomberg
News also revealed that defendant Lisa Krinsky, who is described in
SEC filings and Company literature as a medical doctor, has never
been licensed to practice medicine in the United States. On news of
this, shares of SFBC fell $9.98 per share, or 26.34 percent, to
close at $27.91 per share on November 3, 2005. Then, on November
16, 2005, Bloomberg News reported that SFBC threatened to arrange
federal deportation of Latin American immigrants who disclosed
health risks in clinical trials, according to people who
participated in the company's Miami-based experiments. The
participants also said SFBC tried to make them sign false
statements. SFBC placed at least three drug trial participants in
separate rooms with SFBC officials, including Chief Executive
Officer Arnold Hantman, who, using profanity, threatened to call
the U.S. Department of Homeland Security to have the participants
deported if they didn't sign statements refuting the Bloomberg News
story published Nov. 2. On news of this, shares of SFBC fell $7.20
per share, or 21.71 percent, to close at $25.97 per share on
November 16, 2005. On December 15, 2005, SFBC cut its profit
forecast for 2005. The Company expected earnings per share of $1.56
to $1.61, down from $1.66 to $1.72, which the Company set forth in
November. SFBC also stated that the reduction in this year's
earnings estimate included 3 cents a share in legal and other
expenses related to the Bloomberg articles and 2 cents in lost
earnings per share "as a direct result of one client canceling two
signed contracts of ongoing studies due to the Bloomberg articles."
Additionally, on December 15, 2005, Bloomberg News ran another
story wherein it stated that nine participants in a September drug
trial in SFBC's Montreal facility tested positive for latent
tuberculosis, according to the Montreal Regional Health Department.
On news of this, shares of SFBC fell $1.88 per share or 10.65
percent to close at $15.78 per share on December 15, 2005. On
December 16, 2005, SFBC was reduced to "neutral" from "outperform"
by Robert W. Baird & Co. Robert W. Baird & Co. stated that
it had identified several misstatements from management and lost
confidence in management. They pointed out that the SFBC
Investigation revealed that SFBC received seven FDA Form 483
citations between 1998 and 2005 at its Miami, Florida facility,
when management previously communicated to Robert W. Baird &
Co. that it only received three such letters. According to Robert
W. Baird & Co., one such letter, received in June 2002, related
to SFBC's informed consent process. Additionally, the report stated
that SFBC management informed them on December 6, 2005, that SFBC
had not lost any existing business; however, on December 15, 2005,
in a conference call with analysts, SFBC announced that one of its
clients cancelled its drug testing studies in late November and
that the Company expected slower demand for its services in the
future. On news of this, shares of SFBC fell $2.64 per share, or
16.73 percent, to close at $13.14 per share on December 16, 2005.
Since November 1, 2005, the day before Bloomberg News reported that
bioethicists said the company's consent process inadequately warned
drug trial participants of the risks of injury and death, through
December 16, 2005, SFBC stock fell from $41.49 per share to $13.14
per share, a drop of 68.3 percent. On December 19, 2005, SFBC
announced that Gerald Seifer had resigned from his position with
the Company. Then on January 3, 2006, SFBC announced that its board
of directors had appointed Jeffrey P. McMullen as chief executive
officer replacing defendant Hantman, who was retiring. The Board
also had accepted the resignation of defendant Krinsky, who served
as the Company's president and chairman. Then on January 10, 2006,
the Company stated that the U.S. Securities and Exchange Commission
has initiated an informal, non-public request for records primarily
relating to the duties, compensation and expenses of two former
employees, Lisa Krinsky and Gerald Seifer. SFBC intends to fully
cooperate regarding this request. Plaintiff seeks to recover
damages on behalf of class members and is represented by the law
firm of Schiffrin & Barroway, which prosecutes class actions in
both state and federal courts throughout the country. Schiffrin
& Barroway is a driving force behind corporate governance
reform, and has recovered billions of dollars on behalf of
institutional and individual investors from the United States and
around the world. For more information about Schiffrin &
Barroway, or to sign up to participate in this action online,
please visit http://www.sbclasslaw.com/. If you are a member of the
class described above, you may, not later than March 6, 2006 move
the Court to serve as lead plaintiff of the class, if you so
choose. A lead plaintiff is a representative party that acts on
behalf of other class members in directing the litigation. In order
to be appointed lead plaintiff, the Court must determine that the
class member's claim is typical of the claims of other class
members, and that the class member will adequately represent the
class. Under certain circumstances, one or more class members may
together serve as "lead plaintiff." Your ability to share in any
recovery is not, however, affected by the decision whether or not
to serve as a lead plaintiff. You may retain Schiffrin &
Barroway, or other counsel of your choice, to serve as your counsel
in this action. CONTACT: Schiffrin & Barroway, LLP Darren J.
Check, Esq. Richard A. Maniskas, Esq. 280 King of Prussia Road
Radnor, PA 19087 1-888-299-7706 (toll-free) or 1-610-667-7706 Or by
e-mail at DATASOURCE: Schiffrin & Barroway, LLP CONTACT: Darren
J. Check, Esq. or Richard A. Maniskas, Esq., Schiffrin &
Barroway, LLP, +1-888-299-7706, +1-610-667-7706, or Web site:
http://www.sbclasslaw.com/
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