We have filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of investors who purchased American Depositary Receipts (ADRs) of Elan Corporation, plc (Elan) (NYSE: ELN) or call options thereon, or who sold put options on Elan ADRs during the period from July 21, 2008 through and including 4:00 pm EDT on July 29, 2008 (the Class Period).
If you traded Elan securities during the Class Period, and wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action, determine whether you are a class member, or have any questions concerning this notice or your rights, please contact plaintiffs’ counsel, Ethan Wohl, at 866 582 8140 or 212 758 4000, or via email at ewohl [at] wohlfruchter [dot] com. Any member of the proposed class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The complaint alleges that S.A.C. Capital Advisors, L.P. (SAC Capital) and related parties, including its founder and chief executive officer, Steven Cohen, engaged in illegal insider trading in violation of the Securities Exchange Act of 1934 by selling Elan ADRs and trading options ahead of adverse clinical trial results for an Alzheimer’s disease drug that was central to Elan’s drug development efforts.
As alleged in the complaint, a portfolio manager at SAC Capital, Mathew Martoma, obtained inside information from the medical doctor who chaired the drug’s safety monitoring committee, Sidney Gilman. The complaint further alleges that after obtaining the clinical trial results from Gilman, Martoma spoke with Cohen, and over the following seven trading days, SAC Capital then liquidated its entire holding of Elan ADRs, worth over $350 million, and acquired a short position in Elan amounting to approximately 4.5 million ADRs.
When the results of the clinical trial were publicly disclosed after hours on July 29, 2008, Elan’s ADRs dropped sharply in value, closing the next day down 41.8% from the 4:00 pm closing price on July 29, 2008, prior to the public disclosure. According to the complaint, by liquidating its long position and selling short in advance of the disclosure of the disappointing clinical trial results, SAC Capital avoided losses and obtained gains of at least $220 million on its investments in Elan.
Martoma is presently the subject of a criminal prosecution for his alleged role in the insider trading of Elan securities. Gilman has settled civil charges brought by the Securities and Exchange Commission (SEC) arising out of his conduct, agreed to pay more than $200,000 in disgorgement, and has entered into a nonprosecution agreement with the U.S. Attorney’s office.