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Kaplan Fox served as lead counsel for the Los Angeles City Employees’ Retirement System, the court-appointed Lead Plaintiff in this securities fraud class.
The action arose from Sequenom’s representations that it was purportedly developing and commercializing prenatal screening and diagnostic tests for Trisomy 21 (“T-21”), or Down syndrome, using its non-invasive, circulating cell-free fetal nucleic acid based assay technology.
On April 29, 2009, after the close of trading, Sequenom disclosed that the expected launch of its T-21 test would be delayed and that the Company’s prior positive statements about the data and tests, including statements that the test was nearly 100% accurate in identifying Down syndrome, were no longer reliable. Further, the Company stated that employee mishandling of R&D test data and results raised a significant concern regarding the integrity of that data. The Company also announced that four employees had been suspended. The Company’s board of directors reportedly formed a special committee of independent directors to oversee an investigation of the employees’ activity related to the test data and results for the Down syndrome product. Also, on April 29, 2009, the Company indicated that investors should no longer rely upon the T-21 R&D test data and results and all previous announcements about such data and test. The disclosure caused Sequenom stock to decline approximately 76%.
On May 3, 2010, the Court approved final settlement of this action. The settlement provided for $14,000,000 in cash plus interest, and approximately 6,816,743 shares of Sequenom common stock, with an approximate value of $43 million as of May 3, 2010, for a total value of approximately $57 million as of May 3, 2010. Further, as part of the settlement, the Company agreed to implement important corporate governance reforms.
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