Tuesday, May 15, 2012

To Sue or Not To Sue

On Friday, May 11th, 2012 it was reported in various media outlets that multiple law firms had announced that a law suit seeking class action status had been filed in the U.S. District Court for the Southern District of Florida on behalf of purchasers of Common Stock of Mako Surgical between January 9th, 2012 and May 7th, 2012.

The Complaint alleges that Mako Surgical and certain Officers and Directors had violated the federal securities laws.  Specifically, the Complaint alleges that Mako had failed to disclose adverse facts, including that the Company was poised to suffer a wider first quarter loss, that utilization rates were dropping, that the Company outlook lacked a reasonable basis, and that the defendants lack a reasonable basis for their claims regarding the Company's outlook.  So this got us thinking and debating the financial issues surrounding multiple companies that exist in spine, and the potential legal action that investors could take regardless whether these spine companies are publicly traded or not.

We have witnessed the demise of multiple companies, Vertebron (RIP), Impliant (IP acquired), Archus (Acquired), Spinal Concepts (Acquired) Innovative Spine Technologies (RIP), Applied Spine Technologies (IP acquired), Disc Dynamics (RIP), Disc Motion Technologies (MIA), Hydrocision (Acquired), Cardo-Medical, and REO Spine (A blast from the past), for various reasons.  Some for mismanagement of funds, some for plain stupidity, and some for plain old greed. So the question that we posed during our round table discussion was whether or not current investors in some of the smaller spine companies, that are hanging on a thread or show no growth, have legal recourse if some of these ventures have failed to achieve forecasted milestones?  How does one take control of your investment?  A hostile takeover?  Litigation? What happens if the BOD is stacked with Cousins, Brothers and Sisters? What if the company is spiraling out of control?

Does it behoove an investor to access audited financials, or should the investors be able to hire an independent auditor acting on behalf of their interest?  What happens if a CEO and CFO are "doctoring" the books by transferring money from one company to another company without disclosing these facts, is this grounds for litigation. Could these individuals be perpetrating fraud? What happens when a company claims that it is doing better than it really is, utilizing this information to create an atmosphere of growth when in fact a company has no growth or has lost revenue?  The beauty of the U.S. legal system is that every company or individual has a right to a fair trial, but can some of these companies sustain the financial burden that litigation would present?   

Granted there are companies out there that have raised tens to hundreds of millions of dollars and probably generate revenue that leaves investors shaking their heads.  If you were an investor in a privately held company wouldn't you want to know how your money is being managed?  What the Mako scenario tells us is that investors are unlikely to sit back and be duped by the company or the underwriters.  Granted Mako will have its day in court, but could this lawsuit be setting a new precedent across the board in the device industry?  TSB wants to know what our readers think?

32 comments:

  1. My Awful Knee Operation? (MAKO)

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  2. TSB just opened a can of worms in relation to private firms and their investors.

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  3. Let me count the ways, how much moolah have some companies taken in, and what do they have to show, bupkus. The inventors have a job and have suckered the investors, can I hear lawsuits?

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  4. Seems to be catching. Listen to the Bacterin first quarter "earnings call". I have never heard before analysts actually chastising a CEO during the call.

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    1. The best is you go to the Bacterin website and the only call you can listen to is Q3 - 2011. They've scrubbed the call from Q1-2012 when Guy Cook had his ass handed to him.

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    2. Here it is

      http://earningscast.com/q1-2012-bacterin-intl-hldgs-inc-earnings-conference-call

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    3. I just listened to that call...love listening to douchebags squirm as they are asked hard but honest questions.

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    4. The big companies, the small companies all can have CEO's who act in their own self interests. Most burn to the ground but too bad for their employees

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  5. TSB - you shouldn't read anything into this lawsuit. Every public company in every industry is sued by these joke lawfirms when they miss earnings estimates. The company settles, the lawfirms get the bulk of the "winnings", and the investors generally don't even realize what happened. Companies consider it a cost of business and the guys like John Edwards get rich on the back of shareholders. It's a scam and a problem with our legal system.

    As for private investors, the documents generally have very strong protections for investors. What they don't protect for is the investors being stupid, which most VCs are. There is no recourse for making stupid decisions. It still surprises me that money flows into this broken industry, but I guess there will always be dumb money out there.

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  6. It seems pretty obvious that this blog has become irrelevant. Fewer and fewer people visit the site or respond to the site. The reason, in my opinion, is that it has become a smear, tar-and-feather, bitch fest. Very negative. "Calling people out" is just an invitation for malice and slander.

    The blog could be a beacon of hope and promise for the spine industry. Here are some topics that might revive TSB: What companies are well run? Which products incorporate real innovation, and why? What can we do about the FDA failing to meet their obligations and follow the rule of law? Do you have any FDA horror stories to share? What positive stories can you share about the FDA? What distributors and reps deserve praise? Where is the healthcare industry going in terms of ACA, PODs, etc.

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    1. Dumb. For every person who submits a well run company you will have one or more trashing it. So as long as the blog is limited to readings by the human race, this is the way it is. Dont read it if you dont like it. Your choice

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    2. Then maybe TSB shouldn't allow anonymous comments?

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    3. John Smith...Jr.May 16, 2012 at 1:20 PM

      That too is dumb. OK I wont post anonymously.

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    4. "A beacon of hope and promise for the spine industry". Are you kidding me? Out of all the orthopaedic industries, spine has been, is, and always will be the dirtiest, and most corrupt. Too much room for fraud to occur, and with all the new players literally paying to get into the game for that 1 or 2% of Medtronic business no hooe in sight for any change. Some of you salesboy punks make me laugh.

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    5. 9:37 MSM here, just for shits and giggles; 1. why don't you let us know who you work for and we will write something about your company 2. Since you have such vast knowledge of our numbers, why don't you inform our readers what they are, moron 3.Unhappy with the content of the blog, why don't you be the first to send us a check and we will start writing from the point of view that OTW does, or start your own and finally, since you have gone to law school, explain the difference between malice and slander, considering that anything maliciously posted on this blog would really fall under libel. Shssh! What do you want a feel good moment? Here follow the bouncing ball,

      Everything is beautiful in its own way, like a starry summer night
      or a snow covered winters day, everybody's beautiful in their own way
      Under God's heaven, The Spine world's gonna find a way

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  7. 420, and who are you? I bet there are a few of us running around who wouldn't make you laugh.

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    1. You're right, you all don't make me laugh. The only sales reps who add value.....the really hot babes!! They'd get all my implant business ( pun intended). The rest of you are all parasites who only drive up product cost, like you, 6:27

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    2. Like you really have a shot at the hot babes! Now YOU are making ME laugh.

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  8. what's the matter 9:37 don't you have a filter in your brain, or do you need to be spoon fed, its called exercising your first amendment, it's a blog not the Holy Bible and even that's up to your own interpretation. Imagine what your response would be if you had to pay for something, LOL

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  9. Speaking of law suits....did anyone catch the law firm commercial encouraging patients to call and potentially sue over their surgeons use of Infuse. It was during the 2pm to 6pm airing of the Mecum Auto Auction on Velocity Channel.

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    1. 5:14, did you see that the DOJ dropped their 4 yr investigation into Infuse yesterday?
      Those commercials have been running for quite some time.

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    2. 5:14 here...

      No I did not hear that about the DOJ dropping the lawsuit. It was the first time I've seen the commercial.

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  10. Any word on New Hampshire "no pod law"

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    1. TSB...you touched on this a few blogs back. Anymore you can dig into here?

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  11. Any one have an opinion of Centinel spine? good leadership or another lifestyle company for a couple of so called leaders?

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  12. Did Paul "Chateau" Briand call you? Run away.

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  13. Anyone hear from Cappaccino, condsidering he is a spine whore, anyone who buys into his B.S. is truly ignorant...when will the spine industry boot him for being a prostitute?? Good luck Lanx, Spinewave next, maybe Globus, Alphatec, not. He'll probably end up at MDT where he started, should be a fun circle of life and a whole lot of Attorney headaches.

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    1. Old Cappy got his an office at LANX right next to the CEO. IM SURE HELL STAY THERE UNTIL HE SUCKS ALL THE LIFE HE CAN OUT OF THEM.

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  14. why are PODs an issue when Depuy has what you can consider almost , DOPs "distributor owned physicians" in Philadelphia and NJ? these distributor influenced docs are the same as PODs. the distributor makes millions off of these "loyal" surgeons

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  15. Mako has no long term clinical evidence on their implants. It's not how you put in, it's what you put in that will stay with the patient for the rest of their life. Mako will be hung out to dry once the investigation is complete. I hope someone ends up in jail.

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  16. Robotic knee jive,
    Technology run amok,
    Gimme a refund!

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