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Class Action Lawsuit Filed Against Walgreen Co. for Securities Fraud
| April 20, 2008. |
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Baltimore MD: It was announced on Friday April 18, 2008 that a class action lawsuit has been filed against Walgreen Co. on behalf of those who purchased the company's common stock between the dates of June 25, 2007 and November 29, 2007.
The lawsuit, filed in the United States District Court for the Northern District of Illinois, alleges that two of its officers, as well as the company as a whole were in violation of federal securities laws when they issued misleading and false statements that led to the supposed inflation of securities and caused those involved in the class action suit to pay more for those securities than necessary.
 The lawsuit says that in all reality, Walgreen was experiencing a decline in its growth of the core function of its business, which is filling prescriptions and failed to inform investors of this. The plaintiffs say they were misled to believe that the profits and sales of Walgreen Co. were doing well.
The lawsuit says that one of the reasons why Walgreen's earning were eroded was because of a dispute regarding a material contract with CVS Caremark. Walgreen was disputing the reimbursement rates for several of CVS's drug plans at their locations in the upper Midwest section of the United States. The dispute claimed that the CVS reimbursement plan was negatively impacting Walgreen's earnings.
Then on October 2007, Walgreen reported that their net income per share was $0.40, which was well below analysts' expectations for the company. This caused the stock to drop to $39.96 per share from $47.00 per share.
On November 29, 2007, Walgreen announced that it would not be providing prescriptions for those with the Caremark prescription plan after months in dispute with Caremark over their reimbursement rates for four of the insurance provider's prescription plans. After this announcement, Walgreen stock dropped to $36.59, making it the lowest stock price in three years for the company.
This lawsuit comes on the heels of another class action lawsuit that alleges Walgreen Co. discriminated against African American workers.
As for the lawsuit alleging securities fraud, the class has not yet been certified.
By Ginger Gillenwater
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