Lowenstein, Sandler represents many of the defendants in the Schering ENHANCE Securities Fraud putative class action. That firm also represents many of the same defendants — in an earlier iteration of a Schering Securities Fraud class action — the one involving manufacturing problems related to the Clarinex launch in 2001. That older piece of litigation has progressed a bit in the intervening years, leading to motions for summary judgment, filed by the Lowenstein firm.
Read the below, from one of those filings — click it to enlarge.
“. . . .unless such silence renders an affirmative [truthful, but incomplete] statement misleading. . . .”
Now, consider that Sen. Grassley, and many of the plaintiffs, are beginning to focus upon the idea of “functional unblinding“. It was apparently one of the more important events on the plaintiffs’ ENHANCE securities fraud timeline — the “functional unblinding” of ENHANCE, as early as January 2007 — a full year before Schering presently admits it had formally-unblinded results from ENHANCE.
If this functional unblinding theory is established by competent evidence, then every statement filed with the SEC about the Cholesterol Franchise was arguably “misleading” — in that it ommitted what Schering already well-knew: ENHANCE had failed. That is the sort of “silence” that has been held to be misleading enough to sound in securities fraud.
That would make the highlighted statement, toward the end of the letter, above, very troublesome for Schering, Messrs. Hassan and Becherer, et al., and Lowenstein.
We’ll know far more on August 1, 2008.