Charles River Labs Facing Investor Class Action Over Stock Drop Allegedly Linked to DOJ Primate Imports Investigation
Coleman v. Charles River Laboratories International, Inc. et al.
Filed: May 19, 2023 ◆§ 1:23-cv-11132
A class action claims Charles River Labs and several top officers have injured investors financially by concealing that the company was being investigated by the DOJ over its allegedly illegal importation of primates for research.
Charles River Laboratories International, Inc. James C. Foster David R. Smith Flavia Pease
A proposed class action claims Charles River Laboratories International and several top officers have injured investors financially by concealing that the pharmaceutical company was being investigated by the U.S. Department of Justice over its allegedly illegal importation of primates for research.
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The 23-page lawsuit says that the defendants—including Charles River CEO James C. Foster, CFO Flavia Pease, and former CFO David R. Smith—made false statements and/or failed to disclose certain adverse facts in several of the drug company’s quarterly and annual reports filed with the U.S. Securities and Exchange Commission (SEC).
In particular, the suit charges that Charles River Labs failed to inform investors that it had engaged in the illegal importation of non-human primates for research, which as a result put the company at a greater risk of investigation by the U.S. Department of Justice (DOJ) and forced it to halt shipments of primates from Cambodia.
The case argues that the defendants’ alleged misrepresentations created an “unrealistically positive assessment” of the company in the market, misleading investors about the truth of Charles River Labs’ financial standing and prospects and artificially inflating the price of its securities.
The company, which helps develop and manufacture drugs and therapeutics in part by conducting safety assessment studies, issued a press release on February 22 of this year in which it stated that it received a subpoena from the DOJ, in conjunction with the U.S. fish and Wildlife Service, with respect to an “ongoing investigation … into the supply chain and illegal importation of non-human primates for research,” the complaint relays. According to the filing, Charles River Labs announced that it was therefore “voluntarily suspending shipments of primates from Cambodia.”
The same day, CEO James C. Foster said on a call with investors that the investigation and supply suspension would “reduce revenue growth by 200 basis points to 400 basis points” for the year, the lawsuit shares. The company’s stock price promptly fell 10 percent to $219.09 per share, the suit reports.
As a result of the defendants’ “wrongful acts” and the subsequent plunge in the company’s stock value, investors who purchased Charles River Labs securities at artificially inflated prices have incurred substantial losses, the case claims.
The DOJ’s investigation stems from the November 2022 indictment of a “monkey-smuggling ring” that was accused of illegally catching wild long-tailed macaques, an endangered species, from protected areas and “falsifying permits amid a shortage of monkeys at the breeding facilities,” the complaint relays.
Per the filing, a March 2023 Washington Post article hinted at a possible link to Charles River Labs, which according to the report “provide[s] primates to drug companies as well as academic and government scientists, and [it relies] on multiple sources, including international suppliers.”
The plaintiff purchased Charles River securities at artificially inflated prices and suffered damages as a result of the alleged misrepresentations about the company’s operations and prospects, the case claims.
The lawsuit looks to represent all individuals or entities that purchased or acquired Charles River securities between May 5, 2020 and February 21, 2023 and who were damaged thereby.
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