NEW YORK, Jan. 25, 2006 (PRIMEZONE) -- Murray, Frank & Sailer LLP and the Law Offices of Avv. Pietro Adami have filed a class action lawsuit in the United States District Court for the District of New Jersey on behalf of shareholders who purchased or otherwise acquired the securities of SFBC International, Inc. ("SFBC" or the "Company") (Nasdaq:SFCC) between August 4, 2003 and December 15, 2005, inclusive (the "Class Period"). SFBC International, Inc., Lisa Krinsky, Arnold Hantman, and E. Cooper Shamblen are named as defendants.
SFBC is a global drug development services company that provides early and late stage clinical drug development services, such as clinical trials, to pharmaceutical and medical device companies. The complaint charges SFBC and certain of its officers and directors with violations of the Securities Exchange Act of 1934, and alleges that throughout the Class Period defendants made materially false and misleading statements to the investing public regarding its financial performance and prospects in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The complaint alleges that defendants engaged in a scheme to defraud shareholders and cause the Company's stock to be artificially inflated through the issuance of statements misrepresenting the quality of the Company's services and the regulatory risks facing the Company given its business practices. In carrying out clinical trials for drug candidates, SFBC recruits human subjects to participate in the studies. During the Class Period, SFBC cited its strength in recruiting people willing to undergo drug trials so that data could be compiled for manufacturers in reporting increasing revenue and higher profit margins. With the stock inflated as a result of the defendants misrepresentations, defendants completed two equity offerings resulting in proceeds of approximately $163.96 million and the individual defendants sold personally held shares of SFBC stock resulting in proceeds of approximately $24.91 million.
However, undisclosed to investors were numerous conflicts of interests and violations that would ultimately impair the Company's ability to sustain its ongoing business operations at levels declared by defendants. Moreover, the ongoing violations could expose the Company to significant losses resulting from regulatory action and customer loss. On November 2, 2005, Bloomberg News published an article entitled "Big Pharma's Shameful Secret," exposing SFBC's recruitment techniques as faulty and its clinical practices as fraudulent. The article reported that, among other ethical and regulatory violations, SFBC had paid drug trial participants to discourage them from reporting adverse reactions to the drug tests, a scheme that led manufacturers to continue with testing, and failed to implement certain controls necessary to insure proper study conditions and test results. Over the next several weeks, more information became public about SFBC's improper recruiting techniques, resulting in the resignation of Gerald Seifer, SFBC's Vice-President of Legal Affairs. SFBC's stock fell from $41.49 on November 2, 2005 to $15.78 on December 15, 2005, a drop of over 60%.
If you purchased or otherwise acquired SFBC securities on any exchange between August 4, 2003 and December 15, 2005, and sustained damages, you may, no later than March 6, 2006, move the Court to serve as lead plaintiff. Shareholders outside the United States may also join the action, regardless of which exchange was used to purchase the securities. To serve as lead plaintiff, however, you must meet certain legal requirements. You can join this class action as lead plaintiff online at http://www.murrayfrank.com/CM/NewCases/NewCases.asp. Murray, Frank & Sailer LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than fifteen years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States. If you would like to discuss this action, this announcement, or your rights and interests, please contact plaintiff's counsel Eric J. Belfi or Christopher S. Hinton of Murray, Frank & Sailer LLP.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.