Following news that multiple Chinese government departments have initiated investigations into AstraZeneca (AZN, Financial), involving several high-ranking executives, the company's ADR stock plummeted over 7%, leading to investor concerns. Two prominent U.S. law firms, known for representing shareholder class actions, have announced they are investigating potential securities fraud and other illegal business activities by AstraZeneca.
Pomerantz LLP has stated it is investigating whether AstraZeneca and certain executives or directors were involved in securities fraud or other unlawful activities. Additionally, Levi & Korsinsky has also started an investigation into potential violations of federal securities laws by the company. Both firms are encouraging affected investors to contact them.
The backdrop to these legal actions is the significant drop in AstraZeneca’s stock price, which had already fallen by 20% over the past month. Following the stock's decline, AstraZeneca’s UK headquarters addressed concerns regarding their Chinese executives. They disclosed that an ongoing investigation, which began three years ago, involved over 100 former employees in a large-scale insurance fraud case, although no current executives are implicated except for President Wang Lei and two other executives.
This situation has caused a stir among investors, with some arguing that AstraZeneca's delayed disclosure contributed to the stock's decline, and they seek compensation. With uncertainties surrounding the ongoing investigation, investors remain skeptical about the company's transparency of disclosed information.
Legal experts suggest that the law firms plan to proceed with the lawsuit, seeing an opportunity for attention and potential success. However, they also acknowledge the complexities of U.S. litigation, which involves a thorough examination of evidence and stock price changes concerning disclosures. Despite risks, plaintiffs in class actions do not bear legal costs, but any recovered funds are divided between lawyers and plaintiffs, typically in a 30-70 split.
