Bloomberg- Biovail Corp., the Canadian maker of the antidepressant Wellbutrin XL, plans to pursue a lawsuit against a group of hedge funds it accuses of driving down its share price after settling aseparate case.
Biovail, based in Mississauga, Ontario, said today it reached a settlement with Banc of America Securities LLC, a unit of Bank of America, and David Maris, one of its former analysts. Biovail spokesman Seth Faison said he couldn’t confirm a New York Post report that Biovail agreed to pay $2 million to Maris and the bank to cover legal fees.
The settlement agreement “is expected to be extremely helpful in Biovail’s pursuit of its lawsuit” against Steven Cohen’s SAC Capital Advisors LLC’s hedge fund, the company said in a statement. Maris will “provide substantial sworn testimony” and he and the bank might have to turn over additional materials such as e-mails, correspondence, tape recordings and trading records, according to Biovail.
In a lawsuit filed in federal court in Newark, New Jersey, on Feb. 22, 2006, Biovail accused SAC Capital Advisors of helping “ghost write” negative and false reports in 2003 and 2004 to lower the share price after SAC took short positions in the stock. Short sellers borrow shares in anticipation of making a profit by paying for them after the price drops.
“A critical element of the scheme was and remains short- selling,” the company said in the original complaint. “The defendants, in concert with one another and others, drove down the price of stocks they had shorted.”
The suit was transferred to the Superior Court of New Jersey in Essex County Jan. 9.
