Friday August 21, 02:48 PM
Judge dismisses Biovail suit against SAC Capital
By Joseph A. Giannone
NEW YORK, Aug 21 (Reuters) - A New Jersey state judge has dismissed Biovail Corp's lawsuit accusing hedge fund SAC Capital Advisors of conspiring with other firms to drive down the stock price of Canada's largest publicly traded pharmaceutical company.
Judge Donald Goldman of the Superior Court of New Jersey dismissed the 2006 suit on Thursday after finding the court lacked jurisdiction and that Biovail failed to prove that it was entitled to damages. Goldman noted he did not evaluate the merits of Biovail's claims against SAC or research firm Gradient Analytics Inc.
The lawsuit said SAC had colluded with independent research firms and Wall Street banks in the spring of 2003 to produce negative reports on Biovail that it knew were false. SAC and other hedge funds would then bet against the company's shares and profit when the price fell.
When the Gradient reports were released in June 2003, Biovail's stock price sank to C$18 from more than C$50, Judge Goldman wrote.
In a similar case on Thursday, a federal judge in Manhattan dismissed a former Cyberonics Inc (CYBX - news) chief executive officer's defamation lawsuit that targeted comments made by two analysts about stock options he received one day before the medical device company's shares soared 78 percent.
Robert 'Skip' Cummins (NYSE: CMI - news) accused SunTrust Banks Inc (NYSE: STI - news) 's capital markets unit and two analysts of defaming him when they likened a 2004 grant of stock options to illegal backdating.
The Biovail dismissal marks the latest legal setback for the company.
In February, a federal judge in New Jersey threw out a similar conspiracy lawsuit that several Biovail shareholders had filed against SAC.
SAC and Gradient denied the claims and have argued Biovail's stock fell because of its own improprieties.
Earlier this year Biovail paid $138 million in damages to settle a class-action civil lawsuit accusing it of lies and omissions in its financial and public statements. The company also consented to a $10 million penalty for 'chronic fraudulent conduct,' according to the decision.
Biovail declined to comment.
(Additional reporting by Scott Anderson in Toronto; Editing by Lisa Von Ahn) Keywords: BIOVAIL/SACCAPITAL
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