Gana LLP Investigates Investor Losses in Valeant Pharmaceuticals

shutterstock_61142644Until about August 2015, Valeant Pharmaceuticals (Valeant)(Stock Symbol: VRX) was one of the fastest growing pharmaceutical companies on the market.  Then its stock price all but collapsed.  After shares peaked at more than $260 a share in August of 2015, it is now trading at about $26 a share and is down more than 80 percent since last August.

What happened?  According to news sources, as a background Valeant pioneered the financialization of pharmaceuticals.  That is the company does not research and sell drugs. Instead, Valeant continually buys rivals in musty and unloved segments of the market to squeeze inefficiencies out of the companies.  In other words, it engages in drug arbitrage and hikes drug prices.  Remember Martin Shkreli, the executive who hiked up the price of the anti-parasitic pill Daraprim used by AIDS patients by more than 5,000 percent? That’s what Valeant does.

But Valeant racked debt and then lied to investors about its drug sales.  After months of scandals which include the firing of its CEO and reshuffling some of the seats on its board of directors the company admitted to some poor accounting practices.  Basically, the company recorded drug sales twice.  One time when it sold them to mail-order pharmacy company Philidor, and once when Philidor sold them which inflated revenues in 2014 and 2015. The company will re-release almost all of its financial statements which will paint an even bleaker picture of the company. On top of all this the company is the subject of several investigations by Congress and the Securities and Exchange Commission.

What do investors expect form a drug company run by Wall Street.  The company has been run by finance executives over the last decade including Michael Pearson who joined Valeant in 2008, after 23 years at the management consulting company McKinsey and CFO Howard Schiller who joined as CFO in 2011 after 24 years at Goldman Sachs.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client.  In order to make a suitable recommendation the broker must meet certain requirements.  First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

The investment fraud attorneys at Gana LLP represent investors who have suffered securities losses due to the mishandling of their accounts.  The majority of these claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.