Case Update: Galena Biopharma Inc. and its brass have agreed to pay $20 million to settle a securities class action and a derivative suit accusing them of inflating the company's share price with a misleading marketing campaign and committing insider trading
Pomerantz LLP has been appointed Lead Counsel in a class action lawsuit against Galena Biopharma, Inc. ("Galena" or the "Company") and certain of its officers. The class action, filed in United States District Court, District of Oregon, and docketed under 3:14-cv-00410-HZ, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Galena securities between March 12, 2013 and February 11, 2014, both dates inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Galena Biopharma, Inc. is a biopharmaceutical company that focuses on developing oncology treatments to address major unmet medical needs to advance cancer care.
The Complaint alleges that throughout the Class Period, Defendants orchestrated a scheme to increase the value of the Company's publicly traded stock so that insiders could reap the benefits by selling millions of dollars of shares of the Company's stock. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Galena paid $50,000 to a subsidiary of The DreamTeam Group ("DreamTeam") for 240 days of "advertising, branding, marketing, investor relations and social media services"; (ii) certain of DreamTeam's marketing tactics resembled stock promotion schemes which ran afoul of standard investor relations practices; (iii) DreamTeam published favorable articles about Galena on Seeking Alpha that failed to disclose that they were published by DreamTeam and instead appeared to be written from the perspective of individual investors recommending an investment in Galena; (iv) insiders took advantage of the resulting run up in the Company's stock to sell millions of dollars of shares at artificially inflated prices, coinciding with DreamTeam's promotional efforts; (v) this type of stock promotion coupled with heavy insider selling would ultimately cause massive losses to investors as the public became aware of the "pump and dump" scheme; and (vi) as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
On February 12, 2014, a report was published by a TheStreet.com stating that Galena "Pays For Stock-Touting Campaign While Insiders Cash Out Millions", describing the Company's stock promotion scheme.
On this news, Galena Biopharma shares declined $0.85, or over 16%, to close at $4.34 per share on February 12, 2014.