News Room

02/03/2010 - Barrack, Rodos & Bacine Appointed Co-Lead Counsel in CardioNet, Inc. Securities Litigation

Judge Stewart Dalzell of the U.S. District Court for the Eastern District of Pennsylvania confirmed his appointment of Central Laborers’ Pension Welfare and Annuity Funds as the sole lead plaintiff in the securities class action case against CardioNet, Inc., and certain of its senior officers, and further approved Central Laborers’ selection of Barrack, Rodos & Bacine and our co-counsel in the case, Branstetter, Stranch & Jennings, PLLC, as co-lead counsel for the putative class. The case is brought on behalf of purchasers of CardioNet stock during the period from April 28, 2009 through July 10, 2009. It is based, among other things, on highly disparaging statements the company and its senior officers made concerning a research report issued by Jefferies & Company on April 24, 2009, which rated the company as “underperform” and expressed the view that a drastic decrease in the Medicare reimbursement rate for CardioNet’s primary product was imminent, which would cause CardioNet to fall far short of its previously issued revenue and earnings guidance for the years 2009 through 2011. During the class period, CardioNet reiterated its guidance to the market and stated publicly that Jefferies had not conducted “proper due diligence” in writing its report and that a rate increase was just as likely as a rate reduction. However, on June 30, 2009, CardioNet was forced to lower its guidance for 2009 and withdraw its guidance for 2010 and 2011 based on “lower than anticipated commercial reimbursement rates” for its primary product, and on July 12, 2009, it withdrew its 2009 guidance entirely when it was forced to announce that its Medicare reimbursement rate was being cut by 33%, which was within the range anticipated by the Jefferies report. With the June 30 and July 12, 2009 announcements, the price of CardioNet’s stock fell from $16.32 per share on June 30, 2009 to $5.87 per share on July 13, 2009 – an overall decline of $10.45 per share, or 64 percent. Pursuant to the Court’s appointment order, Central Laborers will file its Consolidated Complaint on February 19, 2010, which we will post on this website when it is filed.

If you have any question about this important case, please contact BR&B partner Jeffrey W. Golan by telephone at (215) 963-0600, or by email at jgolan@barrack.com.