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May 7, 2013 /PRNewswire/ -- Robbins Arroyo LLP announces that the firm filed a federal securities fraud class action complaint on
May 7, 2013, in the U.S. District Court for the Eastern District of
Virginia on behalf of all persons who purchased or otherwise acquired Star Scientific stock between
October 31, 2011 and
March 18, 2013, inclusive (the "Class Period"), against the company and certain of its officers and directors for violations of the Securities Exchange Act of 1934. Star Scientific and its operating subsidiaries manufacture, distribute, and sell consumer products and dietary supplements.
Star Scientific Accused of Making False and Misleading Statements Concerning the Company's Business and Operations
The complaint alleges that defendants made materially false and misleading statements during the Class Period in press releases, analyst conference calls, and filings with the U.S. Securities and Exchange Commission (the "SEC"). Specifically, the complaint alleges that Star Scientific misled investors about the true nature and extent of
Johns Hopkins University's ("
Johns Hopkins") involvement in the clinical testing of the company's nutritional supplement, Anatabine; concealed the true nature and extent of its liquidity condition; engaged in improper private placement and related-party transactions since at least 2006; and delayed disclosure of the fact that the company had received subpoenas from the U.S. Attorney's office investigating potential securities fraud.
As a result of defendants' false statements, Star Scientific's stock traded at artificially inflated prices during the Class Period, reaching a high of
$4.99 per share on
July 3, 2012.
Star Scientific's Stock Price Drops on News of False Statements and Federal Government Investigation
January 23, 2013, The Street issued an article entitled "Star Scientific's Made-Up, Misleading Relationship with
Johns Hopkins" stating that Star Scientific misled investors concerning
Johns Hopkins' involvement in the clinical testing of Anatabine. On this news, Star Scientific's stock price dropped
$0.31 per share to close at
$2.33 per share—a one-day decline of nearly 12% on volume of 6.1 million shares.
March 18, 2013, Star Scientific filed its annual report with the SEC for its fiscal year ended
December 31, 2012. In the annual report, the company disclosed for the first time that it was being investigated by the federal government. On this news, Star Scientific's stock price dropped another
$0.34 per share to close at
$1.64 per share—a one-day decline of 17%.
Overall, after these revelations reached the market, Star Scientific's share price declined a total of 67% from the Class Period high.