Not any more

Quebec class action one to watch, Blakes says

In Canada on August 16, 2010 at 18:53

Monday, August 16, 2010 3:31 PM

Quebec class action one to watch, Blakes says

Jeff Gray

A proposed class-action lawsuit filed against a drug company in Quebec will be one to watch, warns law firm Blake Cassels & Graydon LLP.

In a bulletin issued Monday, the law firm says the case against Montreal-based Theratechnologies Inc. could be a test of Quebec’s almost three-year-old legislation, which allows for “secondary market liability.” This is the right of shareholders who bought their stock on the open market to sue companies for failing to make timely or accurate disclosures of information.

The plaintiff is a former shareholder who accuses the company of failing to quickly disclose concerns raised by the U.S. Food and Drug Administration about the company’s main product, a drug for HIV patients called tesamorelin.

In the lawsuit, filed late last month, the plaintiff alleges that Theratechnologies waited until after it held a meeting with the FDA to resolve the issue before it disclosed the matter to shareholders, Blakes says.

None of the allegations have been proven in court.

Blakes says the case, if it goes ahead, has “possible precedential value regarding disclosure practices and liability” under Quebec’s securities legislation.

Ontario adopted similar “secondary market liability” legislation in 2005. Although the predicted U.S.-style rash of shareholder lawsuits did not materialize, there has still been a steady flow of shareholder class actions.

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