January 24, 2005
ImClone Systems Settles Shareholder Lawsuits
ImClone Systems Inc. announced on Jan. 24 (company release here) that it has reached a settlement in the consolidated securities class action and shareholder derivative suit regarding the company's disclosure of information about negative FDA action on a drug application. The timing and completeness of the disclosure was at the heart of the insider trading case against former CEO Sam Waksal, who entered a guilty plea related to his stock transactions the resulted in a seven-year prison term and a recent settlement of the SEC civil action in which he agreed to pay a $3 million civil penalty in addition to disgorgement and prejudgment interest (post here).
According to the ImClone release, the company will make a cash payment of $75 million to a settlement fund, of which $8.75 million will come from insurers. ImClone's release states, "The claims against all defendants would be dismissed with prejudice but the Company would retain the right to continue to pursue certain claims against its former chief executive officer, Samuel D. Waksal." The latter point is important because Waksal still has substantial assets, and the company will pursue its claims against him for breaching his fiduciary to the the company as an officer and director. Waksal's woes are not yet over. (ph).
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