On May 24, 2006, Wolf Haldenstein Adler Freeman & Herz LLP filed a shareholder's derivative lawsuit for the benefit of Caremark, RX, Inc. ('Caremark' or the 'Company'), alleging that certain officers and directors of the Company violated Section 14(a) of the Securities and Exchange Act of 1934 (the 'Exchange Act'), and breached their fiduciary duties to the Company and its shareholders. To view a copy of the complaint, please click on the complaint link to the right.
The complaint alleges that the defendants have engaged in certain transactions, including the backdating of stock option grants, to reap millions of dollars in unlawful windfall profits at the expense of the Company. Pursuant to the Company's stock option plan, options are required to be priced at the price of the company's stock on the day of the grant. If an option is backdated to a day on which a market price was lower than the price on the day the option is granted, then the employee pays less and the company gets less money for the stock when the option is exercised. This gives the employee greater compensation than that to which he or she is entitled, and undermines the incentive value of the option grant. The backdating of stock option grants appears to have resulted in falsely inflated income in Company's financial statements filed with the Securities & Exchange Commission ('SEC'), and the underpayment of federal income taxes by both the Company and the individual executives who received the grants. This has, in turn, resulted in government investigations which may result in further harm to the Company.
On July 20, 2006, the Court appointed Wolf Haldenstein as co-lead counsel.
Wolf Haldenstein has extensive experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the country. The firm has approximately 70 attorneys in various practice areas and offices in Chicago, New York City, San Diego, Washington, D.C., and West Palm Beach. The reputation and expertise of this firm in shareholder and other class litigation has been repeatedly recognized by the courts, which have appointed it to major positions in complex securities multi-district and consolidated litigation.
If you wish to discuss this action or have any questions, please contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, by telephone at (800) 575-0735 (Lawrence P. Kolker or Paulette S. Fox).