US-based law firm Lundin Law, which specialises in securities litigations, is investigating claims against Dr Reddy’s Laboratories for possible violations of federal security laws, which the drug maker has denied.
“The investigation is related to allegations that certain statements issued by Dr Reddy’s were false and misleading concerning the company’s financial performance,” Los Angeles-based Lundin Law said in a statement.
Lundin Law also invited those interested to join “class action lawsuit” against the Indian drug maker.
Reacting strongly to the allegations, Dr Reddy’s said it “has always adhered to all disclosure requirements of both of the Securities and Exchange Commission (SEC) and Indian Stock Exchanges, including accounting practices as per the International Financial Reporting Standards (IFRS) and the India Accounting Standards.”
The company has no further comment on what might be “advertorial press release by law firms and refute all allegations”, it added.
Shares tank
Shares of Dr Reddy’s Laboratories today slumped as much as 7 per cent in morning trade on reports that a US law firm has filed a class-action suit against the drug company.
In a volatile trade, the shares of the company opened at Rs 3,386.05, and touched an early high of Rs 3,404.75. But fell to a low of Rs 3,140, down 6.97 per cent on the BSE.
Similar movement was seen on the NSE, where the stock opened at Rs 3,400 but then lost significant ground and fell to an early low of Rs 3,137.85, down 6.80 per cent. The stock touched a high of Rs 3,405 on the exchange.
On volume front, good numbers were seen as 3.57 lakh shares got traded on BSE and 27.41 lakh shares exchanged hands on the NSE.
On November 6, the company had announced that it received a warning letter from the US Food and Drug Administration over inadequate quality control procedures at three manufacturing plants in India.