Perrigo Company (2009)

Class Period: Nov 6, 2008 to Feb 2, 2009

Lead Plaintiff Deadline: May 11, 2009 + Deadline passed

Summary of Case:

A securities class action has been filed against Perrigo Company (Ticker: PRGO) ("Perrigo" or the "Company") on behalf of common stock purchasers from November 6, 2008 through February 2, 2009 (Class Period) in the United States District Court for the Southern District of New York.  The deadline to file for Lead Plaintiff is May 11, 2009.

The complaint alleges that during the Class Period, defendants misled investors regarding Perrigo's exposure to at least $18 million of Auction Rate Securities ("ARS") held by the Company. In January and February of 2008, several auctions of ARS began to fail, limiting the liquidity of these securities. Eventually it came to light that the investment banks that collected lucrative fees for underwriting the issuance of ARS and conducting the auctions had secretly been buying ARS in their own auctions whenever necessary to keep auctions from failing. By early 2008, however, the banks' balance sheets were stretched too thin for the practice to continue and the market for ARS collapsed.  

Perrigo was left holding $18 million of ARS when the market froze. With few secondary markets and virtually no liquidity, the value of most ARS plummeted, even though the issuers were not in default. However, because the Attorneys General for New York and Massachusetts, as well as the SEC, initiated investigations and/or proceedings against many of the banks that underwrote ARS and conducted the auctions, one bank after another began to redeem the ARS their clients had purchased. Perrigo had a reasonable expectation of redeeming its $18 million in ARS until September 15, 2008. On that date, Lehman Brothers Holdings, Inc. ("Lehman") declared bankruptcy. Lehman was the bank that underwrote and sold the ARS to Perrigo. On November 6, 2008, the beginning of the Class Period, defendants reported the "fair value" of Perrigo's ARS as $14,500,000, but concealed the impact of Lehman's bankruptcy on Perrigo's ARS. Then just three months later, on February 3, 2009, defendants disclosed, for the first time, that Lehman had underwritten and sold the ARS to Perrigo. They also announced that the Company was writing off the entire value of its ARS, wiping out over a third of Perrigo's earnings in the quarter. As a result of this disclosure, the stock price plunged 18% that day, causing massive losses to investors.

If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.