Why, oh why, can't those shareholders who believe in wrongdoing simply file suit, like the concerned investors in PharmaNet Development Group, which was also the subject of an SEC investigation?

On February 6, 2009, Richard Mendez, a purported stockholder of PDGI, filed a putative class action complaint in the Superior Court of New Jersey, Chancery Division, Mercer County on behalf of himself and all other similarly situated stockholders of PDGI against the PDGI Board, PDGI, JLL and Purchaser alleging breaches of fiduciary duty and aiding and abetting breaches of fiduciary duty in connection with the merger. Among other things, the complaint alleges that the proposed transactions contemplated in the Merger Agreement were the result of an unfair process, that PDGI is being sold at an unfair price, that certain provisions of the Merger Agreement impermissibly operate to preclude competing bidders, and the defendants engaged in self-dealing. Among other things, the plaintiff seeks an order enjoining defendants from proceeding with the Merger Agreement.

On February 10, 2009, Cynthia Kancler, a purported stockholder of PDGI, filed a putative class action complaint in the Superior Court of New Jersey, Chancery Division, Mercer County on behalf of herself and all other similarly situated stockholders of PDGI against the PDGI Board and PDGI alleging breaches of fiduciary duty in connection with the merger. Among other things, the complaint alleges that the proposed transactions contemplated in the Merger Agreement were the result of a flawed process, that PDGI is being sold at an inadequate price, and that certain provisions of the Merger Agreement are unlawful. Among other things, the plaintiff seeks an order enjoining defendants from proceeding with the Merger Agreement, an order enjoining defendants from consummating any business combination with a third party and an order directing the individual defendants to exercise their fiduciary duties to obtain a transaction which is in the best interests of PDGI’s stockholders.

On February 18, 2009, the plaintiffs in the foregoing matters filed amended complaints, motions to expedite discovery and motions to consolidate. Both amended complaints added a claim that the Schedule 14D-9 filed by us with the SEC on February 12, 2009 failed to provide PDGI’s stockholders with material information and/or provided them with materially misleading information. In addition, Kancler’s amended complaint also added a claim for aiding and abetting a breach of fiduciary duty against JLL and Purchaser.

On March 5, 2009, the parties to the Mendez and Kancler actions entered into a Memorandum of Understanding setting forth the terms and conditions for settlement of each of the actions. The parties agreed that, after arm’s length discussions between and among the parties, we have provided additional supplemental disclosures to our Schedule 14D-9. In exchange, following confirmatory discovery, the parties will attempt in good faith to agree to a stipulation of settlement and, upon court approval of that stipulation, the plaintiffs will dismiss each of the other above-referenced actions with prejudice, and all defendants will be released from any claims arising out of the merger including any claims for breach of fiduciary duty or aiding and abetting breach of fiduciary duty. The defendants have agreed not to oppose any fee and expense application by plaintiffs’ counsel that does not exceed $180,000 in the aggregate.

Defendants are confident that plaintiffs’ claims are wholly without merit and continue to deny that any of them has committed or aided and abetted in the commission of any violation of law of any kind or engaged in any of the wrongful acts alleged in the above-referenced actions. Each defendant expressly maintains that it has diligently and scrupulously complied with its legal duties, and has entered into the Memorandum of Understanding solely to eliminate the uncertainty, burden and expense of further litigation. If a stipulation of settlement is not received, or of it is not approved by the court, these lawsuits could divert the attention of our management and employees from our day-to-day business and otherwise adversely affect us financially.

(10K March 23 2009)

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(T)he United States Securities and Exchange Commission (SEC) has notified the Company that it has completed a two and half year investigation of the Company related to revenue recognition, earnings, company operations and related party transactions and does not intend to recommend any enforcement action by the Commission. The investigation, which is now closed, was originally initiated as an informal investigation in 2006 and became formal in March 2007.

http://www.bio-medicine.org/biology-technology-1/SEC-Closes-Investigation-of-PharmaNet-Development-Group-and-Recommends-No-Action-14350-1/

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Be well