In re: Boston Scientific Corp. Sec. Litigation, No. 11-2250 (1st Cir. 2012)Annotate this Case
A substantial portion of Boston Scientific's sales in 2008-2009 were of cardiac rhythm management devices handled by a group within the company devoted to such products. In August 2009, Boston Scientific began an audit of CRM sales expense reports from recent trips of sales representatives who accompanied physician customers on tours of Boston Scientific manufacturing facilities; in September Boston Scientific received a subpoena from the U.S. Department of Health and Human Services, requesting information about contributions made by CRM to charities with ties to physicians or their families. Neither the audit nor the subpoena were initially disclosed to the public. After stock prices dropped, a purported class of shareholders sued for securities fraud, Securities Exchange Act, 15 U.S.C. 78j(b), 78t(a)), and associated regulations, 17 C.F.R. 240.10b-5, alleging that statements made by the company were materially false or misleading. The district court dismissed. The First Circuit affirmed, noting other possible causes of loss and finding that plaintiffs did not establish scienter.