Investor relations [IR] departments will be closely following the U.S. Supreme Court review of Merck's challenge to a shareholder lawsuit. The core issue is the timing of Merck's disclosure about fraud allegations concerning Vioxx as well as the timing of the shareholder filing of the complaint. Even the lawyers representing Merck admit there's ambiguity.
In THE NATIONAL LAW JOURNAL, Mike Scarcella provides background on this litigation. A shareholder had filed a lawsuit against Merck regarding the delay in informing investors - "storm warnings" - of possible legal problems with Vioxx. A lower court ruled that the shareholder had a two-year window to file such as suit and missed it. The 3rd U.S. Circuit Court of Appeals overturned that court's decision. Merck petitioned the US SC for certiorari.
The question is when does that two-year-window begin. As Scarcella points out, "The 3rd Circuit panel noted there is disagreement among circuit courts about starting points" - that is when the meter begins running for that two-year timeframe.
Those in IR, particularly given the current intense focus on all kinds of investments, will now be hyper-alert as to what has to be disclosed, how, and when.
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