Small Molecule / Generic / Over-the-Counter

Court Rules in Favor of Allergan; Valeant, Pershing Square to Correct Disclosures

Nov 04, 2014


Allergan Inc. commented on the ruling in the U.S. District Court for the Central District of California in the company's federal securities litigation against Valeant Pharmaceuticals International, Pershing Square Capital Management. and its principal, William A. Ackman.

The company said in a press release the Court found that Allergan raised serious questions as to whether Valeant and Pershing Square violated SEC Rule 14e-3, which prohibits trading on the basis of material nonpublic information when an offering person has taken a substantial step or steps to commence a tender offer of a target company. Specifically, the Court found Allergan's argument "persuasive because, in promulgating Rule 14e-3, the SEC was concerned about the practice of ‘warehousing' (the practice of the tender offer or intentionally leaking information to institutional investors to allow those other entities to make early trades before other investors heard about the tender offer) because such a practice is unfair to investors who are trading at an informational disadvantage."

According to the release, the Court ordered that Valeant and Pershing Square must make "corrective disclosures to their September 24, 2014, proxy solicitation statement in compliance with Section 14(a) of the Securities Exchange Act and Rule 14a-9 promulgated thereunder, including disclosure of the facts underlying defendants' exposure to liability under Section 14(e) of the Securities Exchange Act and Rule 14e-3 promulgated thereunder."

Read the release to find out what the Court ordered Pershing Square and Valeant to disclose.