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SEC v. Stiefel Laboratories, Inc., et al. Case No. 1:11-cv-24438-DPG (S.D. Fla.)

Oct. 12, 2022

On December 12, 2011, the Commission filed a complaint (the “Complaint”) against Stiefel Laboratories Inc. (“Stiefel Labs”) and Charles W. Stiefel (“Stiefel”), it’s Chairman and Chief Executive Officer (collectively, the “Defendants”). The Complaint alleged that, from approximately November 2006 to April 2009, the Defendants violated federal securities laws by failing to disclose to most shareholders material, nonpublic information regarding: (1) the valuation of shares held by Stiefel Labs’ employees in the company’s Employee Stock Bonus Plan; and (2) discussions of the sale of Stiefel Labs. This allowed the Defendants to repurchase substantial shares of Stiefel Labs’ stock from employees and former employees at artificially low prices. By their conduct, the Defendants were alleged to have violated, or aided and abetted in the violations of, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. See the Commission’s Complaint.

The Defendants were ordered to pay and have since paid a collective total of $37,000,000.00 in disgorgement, prejudgment interest, and penalties to the Commission. See Stiefel Lab’s Final Judgment and Stiefel’s Final Judgment.

On June 5, 2020 the Court entered an order creating a Fair Fund (the “Fair Fund”), so the penalties, along with the disgorgement and prejudgment interest, paid by the Defendants can be distributed to those harmed by the Defendants’ conduct described in the Complaint. See the Court’s Order

On June 12, 2020, the Court entered an order that appointed Miller Kaplan Arase LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund, and appointed Robert Levenson and Christopher Martin, two Commission employees, as co-Distribution Agents to develop and oversee the administration of a distribution plan for the Fair Fund, to be approved by the Court. See the Court’s Order

On August 4, 2020, the Court entered an order authorizing the Distribution Agents to retain Epiq Class Actions & Claims Solutions, Inc., as the Third Party Administrator, in this case to assist in the timely and efficient distribution of the Fair Fund.  See the Court’s Order.

On September 24, 2020, the Commission filed a Motion to approve the Distribution Plan, together with the proposed Distribution Plan (the “Plan”). See the Commission’s Motion and the Plan.

The Plan provides for the distribution of the Fair Fund to eligible defrauded shareholders in Stiefel Labs on a pro-rata basis pursuant to the methodology described in therein.

On November 9, 2020 several former Stiefel Labs shareholders filed objections to the Commission’s Plan. The parties object, among others things, to the Commission’s valuation methodology and the former shareholders’ status as Excluded Shareholders under the terms of the Plan. See the Former Plan Participants’ Objections and Mackay Objections

On December 8, 2020 the Commission filed Replies to the Former Plan Participants’ Objections and the Mackay Objections. In their Replies, the Commission asked the Court to deny the Objections and approve the Plan as filed. See the Commission’s Former Plan Participants’ Reply and Mackay Reply.

On May 18, 2021, the Honorable Darrin P. Gayles of the United States District Court for the Southern District of Florida heard oral arguments; and, on May 21, 2021 the Court entered an order which overruled the objections to the Distribution Plan and granted the Commission’s Motion. See the Court’s Order. Epiq will assist the Distribution Agents in implementing the Distribution Plan, including by mailing notices and a copy of the Distribution Plan to Eligible and Excluded Shareholders as those terms are defined in the Distribution Plan. 

For more information, please contact the Distribution Agents: 

Robert Levenson and Christopher Martin
Securities and Exchange Commission


Epiq Class Actions & Claims Solutions, Inc.

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