SciClone - An FCPA Feeding Frenzy

On August 9, 2010 SciClone Pharmaceuticals made an FCPA-related disclosure.

This post discusses what has happened since.

August 10th

Shares of SciClone plunged, at one point down 40% from the previous day's close, closing down 31.9%. (This is clearly in stark contrast to the recent situation involving Schlumberger discussed in yesterday's post - here).

Levi & Korsinsky LLP announce that it is investigating SciClone on behalf of shareholders for possible violations of state and federal securities laws.

The Law Offices of Howard G. Smith announce that it is investigation SciClone on behalf of shareholders for possible violations of federal securities laws.

The law firm of Kahn Swick & Foti, LLC announces the commencement of an investigation into SciClone to determine whether it has violated federal securities laws.

Roy Jacobs & Associates announce that it is investigating SciClone for potentially violating the federal securities laws.

August 11

Pomerantz Haudek Grossman & Gross LLP announce that it is investigating claims on behalf of investors of SciClone to determine whether it has violated federal securities laws.

The law firm of Statman, Harris & Eyrich, LLC announce that it is investigating SciClone for potential violations of state and federal law.

Goldfarb Branham, LLP announce that it is investigating SciClone for shareholders who purchased stock of the company and preparing a possible derivative lawsuit against company executives.

Finkelstein Thompson LLP announce that it is investigating potential shareholder claims concerning SciClone.

August 12

Robbins Umeda LLP announce that it commenced an investigation into possible breaches of fiduciary duty and other violations of the law by certain officers and directors at SciClone.

August 13

The law firm of Kahn Swick & Foti announce that the firm has filed the first securities fraud class action lawsuit against SciClone in the United States District Court for the Northern District of California, on behalf of purchasers of the common stock of the Company between May 11, 2009 and August 10, 2010.

August 19

Barroway Topaz Kessler Meltzer & Check, LLP announce that a class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of purchasers of the securities of SciClone.

Brower Piven, A Professional Corporation, announce that a class action lawsuit has been commenced in the United States District Court for the Northern District of California on behalf of purchasers of the common stock of SciClone.

August 20

Kendall Law Group announce an investigating of SciClone for shareholders.

Ryan & Maniskas, LLP announce that a class action lawsuit has been filed in the United States District Court for the Northern District of California on behalf of purchasers of SciClone.

August 28

Roy Jacobs & Associates (again) announce that it is investigating SciClone for potentially violating the federal securities laws.

September 7

The Shuman Law Firm announces that a class action lawsuit has been filed in the United States District Court for the Northern District of California on behalf of anyone who purchased or otherwise acquired SciClone common stock between May 11, 2009and August 10, 2010.

September 8

Kaplan Fox & Kilsheimer LLP announce that it has filed a class action suit against SciClone alleging violations of the Securities Exchange Act of 1934 on behalf of purchasers of SciClone's common stock during the period May 11, 2009 and August 9, 2010.

September 16

The law firm of Strauss & Troy announce that a class action lawsuit has been filed in the U.S. District Court for the Northern District of California against SciClone for potential violations of state and federal law.

September 23

The law firm of Lieff Cabraser Heimann & Bernstein, LLP announce that class action lawsuits have been brought on behalf of purchasers of the common stock of SciClone.

Given the above, you are probably wondering, geez, what did SciClone disclose - how extensive were the disclosed FCPA violations? Did the company's CEO or CFO resign? Is the company still in business?

Well, not exactly.

On August 9th, SciClone disclosed (see here) as follows:

"On August 5, 2010 SciClone was contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone. In connection with this investigation, the SEC issued a subpoena to SciClone requesting a variety of documents and other information. The subpoena requests documents relating to a range of matters including interactions with regulators and government-owned entities in China, activities relating to sales in China and documents relating to certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the DOJ indicating that the DOJ was investigating Foreign Corrupt Practices Act issues in the pharmaceutical industry generally, and had received information about the Company’s practices suggesting possible violations."

During SciClone's August 9th earnings conference call Friedhelm Blobel (President and CEO) stated that SciClone "intends to cooperate fully with the SEC and DOJ in the conduct of their investigations, and has appointed a special committee of independent directors to oversee the Company's efforts." Blobel noted that "as far as timing is concerned, the lawyers tell us that these investigations typically are long lasting." In response to the question - is the investigation disrupting day-to-day operations or ongoing sales, Gary Titus (CFO) said that "it is business as usual for SciClone, and we continue to focus on all of the priorities that we have set for the Company ..."

That's right.

All of the above occured because the SEC initiated a formal investigation of SciClone and issued a subpoena to the company and because SciClone received a letter from the DOJ as to an industry-wide investigation suggesting possible improper conduct by the company.

You be the judge.

Are the above referenced investigations and lawsuits a rational and value added exercise for shareholders of SciClone or rather indicative of an FCPA feeding frenzy where everyone, it seems, is trying to get a slice of the pie?

Has this all gotten a bit out-of-hand?

*****

Yesterday, SciClone (see here) announced "continued topline growth and strong cash position in the Third Quarter of 2010."