Mallinckrodt ($MNK) $46M Investor Settlement
Mallinckrodt ($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.
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.
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.
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.
Frequently Asked Questions
All persons who purchased or otherwise acquired Mallinckrodt shares during the period from May 03, 2016, to June 12, 2020, both dates inclusive.
No, if you have purchased securities within the class period, you are eligible to participate. You can participate in the settlement and retain (or sell) your securities.
The entire process usually takes 4 to 9 months after the claim deadline. But the exact timing depends on the court and settlement administration.
The final payout amount depends on your specific trades and the number of investors participating in the settlement.
If 100% of investors file their claims - the average payout will be $0.23 per share. Although typically only 25% of investors file claims, in this case, the average recovery will be $0.92 per share.
If you're eligible, you can file your claim directly from this case page by clicking the "Collect Payout" button.
More than 100 companies are currently paying out settlements. Connect your brokerage account to automatically check which ones you may have missed — or file manually for this case.
11th.com is an investor recovery company that helps investors track and collect securities class action settlements. We will:
1. Prepare documents for your payout.
2. Audit the claim and make sure you get the maximum possible payout.
3. File a claim with the settlement administration.
4. Correspond with the settlement administration to resolve emerging issues.
5. Deliver payout directly to your brokerage account.
There is no upfront cost, but we will deduct 20% of the recovered amount as a commission for our services.