By Contributor Joshua Goldsborough, graduate of Florida Coastal School of Law, after working with Well Fargo Financial, and was an intern for the Florida Chief Financial Officer.
The issue is whether Defendants, Omnicare, Incorporated, its officers, and directors, made material misstatements and/or omissions to Plaintiff investors. The investors bought Omnicare securities in connection with a December 2005 public stock offering.
Relief may be sought under § 11 of the Securities Act of 1933, which provides a remedy for investors who have acquired securities under a registration statement that was materially misleading or omitted material information. Furthermore, it imposes liability on issuers and signers of registration statements containing untrue statements or omissions of material fact.
Here, Plaintiffs allege that Omnicare’s Registration Statement stated that Omnicare’s therapeutic interchanges were meant to provide patients with more efficacious and/or safer drugs than those presently being prescribed and that its contracts with drug companies were “legally and economically valid arrangements that bring value to the healthcare system and patients that we serve.” Plaintiffs argue that these representations were material, untrue and misleading because they effectively concealed Omnicare’s illegal activities from its investors.
Omnicare argues that liability only exists to the extent that the statement was both objectively false and disbelieved by the defendant at the time it was expressed. Furthermore, Omnicare argues that Plaintiff’s failed to state a claim and moved to dismiss the complaint because Plaintiff’s did not adequately plead any allegations that Omnicare knew that the legal compliance statements were false when made.
The court held that the plaintiffs had not adequately pleaded knowledge of wrongdoing.