Evanston Police Pension Fund v. McKesson Corporation, et al 3:18-cv-06525 — On October 25, 2018, investors sued McKesson Corporation (“McKesson” or the “Company”) in United States District Court, Northern District of California. Plaintiffs in the MCK class action allege that they acquired McKesson stock at artificially inflated prices between October 24, 3013 and January 25, 2017 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. For more information on the MCK Lawsuit, please contact us today!
Summary of the Allegations
Founded in 1833 McKesson (NYSE:MCK) now has more than 76,000 employees and two primary divisions. Collectively, its business segments deliver “pharmaceutical and medical products and business services to retail pharmacies and institutional healthcare providers such as hospitals and health systems” throughout North America and globally.
According to the October 25 complaint, McKesson’s work as a pharmaceutical wholesaler generates the bulk of the Company’s income. In this capacity, McKesson “purchases drugs in bulk directly from manufacturers and then sells and distributes those drugs to pharmacy networks, hospitals and independent pharmacies.”
Summary of Facts
McKesson and two of its current and/or former officers (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about McKesson’s participation in certain activities and the efficacy of its internal controls over financial reporting from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused McKesson stock to trade at artificially inflated prices during the time in question.
The truth emerged after trading ended on January 25, 2017. At that time, McKesson announced “disappointing financial results for the third quarter of its fiscal year 2017.” Of importance is this context is that McKesson reported “lower than expected North American Pharmaceutical Distribution and Services business unit revenue of $41.7 billion” on the Current Report (Form 8-K) it filed with the SEC.
On another form filed with the SEC that day, McKesson reiterated the financial results it provided on the first firm and reported its financial and operating results for the third quarter of its fiscal year 2017. As alleged in the October 25 complaint, the “poor financial results were due to the materialization of the risk that the price fixing scheme would unravel and lead to materially lower revenues and profits.”
A closer look…
According to the October 25 complaint, the Company “participated in a price-fixing and anticompetitive scheme in the sale and distribution of generic pharmaceutical drugs with manufacturers and wholesalers” throughout the Class Period.”
The complaint also alleges that the Company and/or Individual Defendants repeatedly made false and misleading public statements during that time.
For example, a form that the Company filed with the SEC at the beginning of the Class Period contained signed certifications in which the Individual Defendants attested to “the accuracy of financial reporting, the disclosure of any material changes to the Company’s internal control over financial reporting and the disclosure of fraud – or lack thereof.”
Then, on a form filed with the SEC on May 14, 2014, McKesson mentioned its “Code of Conduct” and specifically noted that it was “applicable to all employees, officers, and directors,” and that it was available on the Company’s website.
As set forth in the complaint, the Code of Conduct employed by McKesson at that time expressly stated, “This Code applies globally to all employees, officers and directors – regardless of position or tenure. We also seek business partners who share our values and commitment to doing business with integrity.”
The Code of Conduct employed by McKesson when it filed yet another form with the SEC on May 12, 2015, also contained stipulations to “Fair Competition.” It stated in pertinent part: “Laws in many of the places where we do business are intended to protect fair an [sic] open competition. To comply with these laws you should not discuss, coordinate, or agree with a competitor to fix prices, split or ‘fix’ bids, refuse to deal with (or boycott) a supplier or customer, or otherwise limit distribution channels.”
Impact of the Alleged Fraud on McKesson’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is December 26, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in GM common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.