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Valeant Pharmaceuticals International Inc. Securities Class Action

The Class Action Case Files


Portfolio monitoring and asset recovery of growing global securities class actions can be daunting.
Broadridge can help simplify the complex.

Just the Facts

On November 16, 2020, the Superior Court of Québec approved a $94 million (CAD) settlement agreement between a group of investors and Valeant Pharmaceuticals International, Inc. (N/K/A Bausch Health Companies Inc.) to resolve allegations that Valeant artificially inflated the price of its shares through a series of material misrepresentations and fraudulent business practices between February 27, 2012 and November 12, 2015. When news of these allegations broke, over $100 billion in shareholder equity was wiped out over the course of one year.

On August 29, 2017, Justice Chantal Chatelain of the Superior Court of Québec authorized two classes of investors of Valeant’s common shares and notes – together referred to as the “original class.” Later, on November 12, 2019, Justice Peter Kalichman authorized a supplementary class of investors as part of a settlement with Valeant’s auditor, PricewaterhouseCoopers LLP. Pursuant to the settlement agreement, the “original class” that comprises this settlement class includes:

  1. Primary Market Sub-Class: All persons and entities, wherever they may reside or may be domiciled, who, during the period February 28, 2013 to November 12, 2015, acquired Valeant’s Securities in an Offering, and held some or all of such Securities at any point in time between October 19, 2015 and November 12, 2015, excluding any claims in respect of Valeant’s Securities acquired in the United States (but not excluding any claims in respect of Valeant’s 4.5% Senior Notes due 2023 offered in March 2015); and,
  2. Secondary Market Sub-Class: All persons and entities, wherever they may reside or may be domiciled who, during the period February 27, 2012 to November 12, 2015, acquired Valeant’s Securities in the secondary market and held some or all such Securities at any point in time between October 19, 2015 and November 12, 2015, excluding any claims in respect of Valeant’s Securities acquired in the United States.

Class members must timely submit their claim forms by February 15, 2021.

As is often the case in securities class actions involving Canadian-domiciled companies (Valeant was headquartered in Mississauga, Ontario) there was a parallel, or sister class action filed in the United States based on similar allegations. That case, In re Valeant Pharmaceuticals International, Inc. Securities Litigation, out of the United States District Court for the District of New Jersey, settled last December for $1.21 billion(USD).

Case Challenges

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LAST-IN, FIRST-OUT (LIFO)

The Plan of Allocation uses the principle of (LIFO)—wherein securities are deemed to be sold in the opposite order that they were purchased—in the calculation. In other words, the last securities purchased are deemed to be the first sold.

IMPACT: This type of calculation is not typical in most securities matters. Given that class members are responsible for calculating their own claims, this can cause issues in determining the true last in and first out transactions. Further, it is our experience that filers and even claims administrators do not apply LIFO matching consistently, so additional care is needed.

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AN INTERNATIONAL EXCHANGE

Eligible securities include Valeant’s common shares purchased on any secondary market, including international exchanges such as the Toronto Stock Exchange in Canada, except for trading venues in the United States, such as the New York Stock Exchange.

IMPACT: Requires a higher-level review of the transactions to confirm the transaction occurred on the correct exchange.

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MULTIPLE ELIGIBLE SECURITY TYPES

There are nine types of eligible Valeant securities included in the settlement: (1) Valeant common shares (purchased pursuant to one of nine different offering memoranda or prospectuses), (2) Valeant 6.75% senior notes due 2018 (2018 6.75% Notes), (3) Valeant 7.50% senior notes due 2021 (2021 7.50% Notes), (4) Valeant 5.625% senior notes due 2021 (2021 5.625% Notes), (5) Valeant 5.50% senior unsecured notes due 2023 (2023 5.50% Notes), (6) Valeant 5.375% senior unsecured notes due 2020 (2020 5.375% Notes), (7) Valeant 5.875% senior unsecured notes due 2023 (2023 5.875% Notes), (8) Valeant 4.50% senior unsecured notes due 2023 (2023 4.50% Notes), and (9) Valeant 6.125% senior unsecured notes due 2025 (2025 6.125% Notes).

IMPACT: First, identifying these types of securities through a standard portfolio monitoring process is difficult because the acquisition may not be reflected as a “purchase” in the underlying transactional data. Second, even after the transactions have been identified as eligible, additional work is required to ensure all data is populated into the required filing format prior to submission. Failure to accomplish either can lead to a failure to file, a reduced distribution, or a rejected claim.

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COMPLEX RECOGNIZED LOSS CALCULATIONS

For the primary market sub-class, shares are determined to be eligible or non-eligible based on their respective purchase and sales dates and such purchase must be pursuant to one of nine different offering memoranda or prospectuses. After offsetting profits for those purchases, the compensable damages must then be risk adjusted to determine a claimant’s compensation from the net settlement fund, which itself will be distributed on a pro rata basis.

IMPACT: Complex recognized loss calculations increase the amount of both time and expertise required to accurately calculate each claim’s recognized loss amount. An incorrect calculation can lead to claims not being filed and will lessen the ability to review and challenge an administrator’s determination, if needed.

Don’t leave money on the table. Let us advocate on your behalf to help you maximize your recoveries.

Reach out to a Broadridge representative today to determine your recovery eligibility.

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