New Company Stock Suit Filed against Boston Scientific
Former employee Robert Hochstadt, was originally a lead plaintiff in the previous suit along with Douglas Fletcher and Michael Lowe, but he dropped out of the suit before a review by U.S. District Judge Joseph L. Tauro of the U.S. District Court for the District of Massachusetts. In dismissing the previous case, Tauro ruled that because Fletcher and Lowe sold more stock than they purchased during the time period when they claimed the company’s stock price was artificially inflated, they likely were not financially injured by any potential misdeed by the employer and therefore, lacked constitutional standing (see Boston Scientific Wins Stock Drop Lawsuit ).
Hochstadt was joined in the new suit by Edward Hazelrig, Jr. in filing the suit on behalf of themselves, the plan, and similarly situated plan participants and beneficiaries. Like the previous case, the new suit claims plan fiduciaries breached their duties under the Employee Retirement Income Security Act (ERISA) by continuing to offer company stock as an investment option from the period May 7, 2004, to January 26, 2006, when the former employees claim the stock price was artificially inflated in light of company problems. The stock price went from a high of $45 per share during the class period to $20 per share at the end of the class period, the complaint says.
According to the complaint the corporate problems that should have caused the defendants to know the stock price was artificially inflated included:
- Information emerged publicly during 2004 to 2006 about safety concerns over Boston Scientific’s stent products;
- A recall of stents in 1998;
- A Department of Justice investigation into the stent recall; and
- Widespread problems in Boston Scientific’s manufacturing facilities.
The suit seeks, among other things, restitution for the plan and affected participants.