MNK.US
id: 1289
Mallinckrodt ($MNK) $46M Investor Settlement
Late claims are being considered for compensation, subject to approval.
$46,000,000
Cash SettlementD. New Jersey
Court3:20-cv-10100
Case number05/03/2016
Class period Start06/12/2020
Class period End04/14/2025
Claim deadlineMallinckrodt ($MNK) has agreed to settle $46 million with investors to resolve claims that the company misrepresented its financial condition and downplayed legal liabilities related to opioid sales.
Outline
Mallinckrodt was accused of hiding the extent of its legal exposure related to opioid sales, between 2016 and 2020. As these issues came to light, $MNK dropped sharply, culminating in a Chapter 11 bankruptcy filing in October 2020. Soon after, Mallinckrodt faced a lawsuit from investors.
Timeline
- May 3, 2016 – Mallinckrodt allegedly began omitting key rebate risks tied to Acthar in SEC filings.
- April 30, 2019 – CNN reported the existence of a whistleblower complaint regarding Mallinckrodt’s rebate practices.
- May 21, 2019 – Mallinckrodt sued CMS over demands to repay Medicaid rebates; $MNK dropped 29%.
- March 3, 2020 – The DOJ filed a complaint supporting whistleblower claims, causing another 25% drop.
- October 12, 2020 – Mallinckrodt filed for Chapter 11 bankruptcy.
- July 26, 2020 – Investors filed a lawsuit, alleging the company hid financial risks.
- December 2024 – Mallinckrodt agreed to settle investor claims.
Background
Mallinckrodt generated billions in revenue from Acthar, a high-priced drug used to treat rare diseases. But behind the scenes, regulators repeatedly warned the company about using an improper pricing baseline to calculate Medicaid rebates.
Internal estimates showed that correcting this issue could reduce Acthar's net sales by 10% annually and cost the company hundreds of millions.
Despite knowing the risks, Mallinckrodt didn’t disclose them to investors. It continued to report inflated revenues, failed to adjust liabilities, and reaffirmed overly optimistic guidance.
In 2019, the company sued CMS to block enforcement and avoid repayment, but a court sided with regulators. A whistleblower lawsuit, later joined by the DOJ, revealed that Mallinckrodt had ignored clear warnings and withheld rebate payments for years.
As the rebate issue unraveled, the stock plummeted, and Mallinckrodt eventually filed for bankruptcy in 2020.
In response to the alleged misconduct, investors soon filed a class-action lawsuit.
What Can Investors Expect Now?
Mallinckrodt has agreed to settle $46 million with investors to resolve claims that the company misrepresented its financial condition and downplayed legal liabilities related to opioid sales.
If you were affected by this situation, you can file a claim to receive your portion of the settlement. You can check if you are eligible and find other details in the FAQ section below.
Case Status
Accepting Late Claims
Alleged Offence
Mismanagement,
Misleading Statements,
Omissions
Suspected Party
Directors,
Management
Security Type
Stocks
Trade Direction
Long
Payout per Share
0.23
Filing date
07/26/2019
Plaintiffs
Canadian Elevator Industry Pension Trust Fund
Attorneys
Carella, Byrne, Cecchi, Olstein, Brody & Agnello, P.C. (Roseland, NJ), Robbins Geller Rudman & Dowd LLP (Melville, NY)
Defendants
Mark C. Trudeau, George A. Kegler, Matthew K. Harbaugh
Judge
Hon. Robert Kirsch
Administrator
Gilardi & Co LLC
Court hearing date
04/15/2025
Exclusion deadline
03/25/2025
Objection deadline
03/25/2025
Attorney fee
$16,830,000
Trades matching type
FIFO