(CN) – Medical device maker Nevro Corp. faces a shareholder class action after the company was allegedly caught stealing trade secrets from a competitor and infringing upon its patents.
The complaint was filed in the District Court of Northern California by the Oklahoma Police Pension and Retirement System after Boston Scientific Corp. filed suit against Nevro, claiming Nevro poached former Boston Scientific employees as well as 34,000 stolen documents. Boston Scientific alleges Nevro violated at least nine patents, news which caused Nevro’s stock to take a major hit.
“The company stunned investors when it reported first quarter 2018 financial results that fell drastically short of estimates,” the complaint states. “The shortfall was blamed in large part on a 31% increase in quarterly operating expenses, driven primarily by legal expenses associated with the company’s patent infringement litigation.”
Initial news of the patent infringement case dropped Nevro’s share price from $92.26 per share to $77.59 per share on July 12, 2018, costing the company roughly $450 million, according to the complaint.
As the patent litigation continued, Nevro informed the Securities Exchange Commission that it was terminating James Alecxih, Vice President of Worldwide Sales without first informing their shareholders, a move that prompted another stock price drop, the class claims.
The shareholders Nevro was scheming to defraud the investing public by omitting the relevant information about the alleged patent infringement, stating that Nevro acted “with reckless disregard for the truth.”
“Such Defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing Nevro’s business practices and prospects from the investing public and supporting the artificially inflated and/or maintained price of its stock,” the complaint states.
The class is represented by David Stickney in San Diego, CA and Avi Josefson in New York, NY from Bernstein, Litowitz, Berger & Grossmann LLP and Maya Saxena in Boca Raton, FL and Steven Singer in White Plains, NY of Saxena White PA.