There are at least two securites class actions pending against AFFY as disclosed in its 1st Q 10Q. There have been motions filed to consolidate the actions, and for the court to appoint a lead plaintiff and lead plaintiffs' counsel. Interestingly, Takeda is also joined as a defendant. One may ask what is the measure of damages? Generally it is the drop in stock market value between the value with the bad investment disclosures and the value with truthful investment disclosures disclosures. This measure is generally a range. In AFFY's case, there are allegations of price per share value of between $27 - $15 per share and a true value of about $2 per share after disclosures were made in fact. That yields a range of damages of between $431M and $925M.
Of course, securities class actions never recover full value, and most are settled within about 4 years. In Bajaj, Mazumdar and Sarin, "Securities Class Action Settlements: An Empirical Analysis (Nov. 16, 2000), it was determined that average settlement of actions with over $100M in market drop, was 15.73% of the total market drop. Based on this average, the settlement value of the AFFY securities class action can be said to be somewhere between $67.79M and $145.5M. In any event, the securities class action is substantial and it would be nice to know AFFY's insurance coverage, other than its disclosure that coverage might be denied or prove inadequate.
I might also point out that many settlements, 28.5%, provide for issuance of new stock to the claimants. I can imagine those damaged by inadequate Omontys disclosures might get both money and stock. Of course, such a settlement would come at the expense of the benefits of the Takeda milestone/royalties agreement and current AFFY shareholders.
Be cautious in your AFFY long investment. Hope this helps put things in perspective, at least for some. GLTA.
AFFY longs say AFFY's litigation is not a problem. This is just the securities class action. There is also now pending a shareholder derivative class action. AFFY also expects products liability claims to be file. That means attorneys have more than likely written demanding settlement before filing a suit. AFFY has less than $10M cash.
GWP, The master of bear scat and copy-and-paste. Folks, this guy is definitely our of his league. He insists he is a lawyer but gives no evidence of such. Boilerplate, cut and paste, is his specialty. Truth is beyond his understanding. Fear mongering is another one of his gold star specialties.
Here is something for doubters to ponder. We who bought long are a goodly number. Did we do it because we wanted to make money or lose money? Do you think we sat down, entered a buy order like buying a lottery ticket, and then pray for an abundant return. If you do, then get real. There have been untold research hours expended in DD, along with keeping it current. We have evaluated risks versus rewards, going forward probabilities, and the history of all three entities. GWP, acting like we are empty headed, likes to repeatedly bring items to our attention that have been consistently dismissed with irrefutable facts. But because he has the inability to understand that we understand what we are doing, he keeps up his sham practices. Do your own DD and if you come to the same conclusions he does then please take some classes in financial analysis. GWP is a lawyer whose advise we have not sought but in as much as he has provided it gratis, we have chosen to ignore it totally. That is the way all lawyers are to be approached. They give advise. You chose to use a portion, all, or none of it. None = GWP. Jim
Sentiment: Strong Buy
There are no merits to any claim and you know it. The only claim there should be is to lawyer companies trying to suck blood from people clueless of their scam to suck paper fees! Disgusting!!
Sentiment: Strong Buy
I am in at $1.06. If O does not come back, I'm out essentially all of my investment. If O does come back, I will sell on the pop.
The ambulance chasers may get some undeserved piece of the action down the road, but I will be gone by then.
Is there enough insurance and money at AFFY to cover this kind of litigation. Not just this securities class litigation, but also the pending shareholder derivative action and the products liability claims?