About a month after Biovail Corp. filed a $6 billion action against 22 defendants, including hedge fund SAC Capital Management, its founder, Steven Cohen, and the research firm now known as Gradient Analytics, shareholders of the Canadian pharmaceutical have followed suit with their own $4 billion class action against basically the same group. According to a release from the shareholders’ law firm, Lampf, Lipkind, Prupis & Petigrow, echoing Biovail’s charges, one of the defendants’ “primary methods” of allegedly manipulating the stock price was “to ‘ghost write’ negative and false analysts reports” about the company. The law firm says, “The attack on Biovail’s stock provides a prototypical example of abuse of analyst reports – an abuse all the more shocking in the wake of recent Wall Street analyst scandals.”
Meanwhile, the Securities and Exchange Commission has subpoenaed documents from Gradient, formerly known as Camelback Research Alliance, for the second time in a month. The SEC’s San Francisco office is seeking phone records, e-mails and other communications between Gradient and hedge funds advisers and journalists regarding market manipulation. This subpoena is different from one issued directly to journalists earlier this month, which caused outrage.