A Diagnostics & Imaging Week
Scott+Scott filed a class action complaint against Signalife (New York) and certain officers and directors in the U.S. District Court for the District of South Carolina. The action was brought on behalf of those purchasing Signalife common stock during the period beginning Jan. 29, 2004 through April 14, 2008, inclusive, for violations of the Securities Exchange Act of 1934.
The complaint against Signalife alleges that during the class period the defendants made materially false and misleading statements concerning, among other things, the company's model 100 ECG heart monitoring device, which the company described as "revolutionary.''
Throughout the class period, the firm said that Signalife touted its heart monitoring product as a marketable and viable product that would be rolled out nationwide through the company's purported marketing partnership with Rubbermaid Medical Solutions (RMS; Huntersville, North Carolina) that would include the formation of a national sales force to market Signalife's model 100 heart monitor. Additionally, during the class period, defendants disclosed the receipt of purchase orders for the model 100 heart monitor and told investors that "we anticipate that the orders should be fully filled by the end of the first quarter of fiscal 2008.'' As a result of these statements, defendants artificially inflated the company's stock price throughout the class period.
However, as the complaint alleges, it became clear at the end of the class period that, among other things, defendants had misled investors by failing to disclose that Signalife had insufficient resources and means to market the model 100 heart monitor and that RMS was not marketing Signalife's heart monitoring product and had no plans to market Signalife's product because it was "not commercially ready for sale.'' Moreover, Signalife revealed that the company was unable to fill its product orders and the company had not made a single sale of its heart monitor during the entire first quarter of 2008. Consequently, the complaint said, the company's stock price plummeted.