Stockholders v Vaso Active Pharmaceuticals, Inc.
Vaso Active Pharmaceuticals Accused of Rigging “Termin8” Athlete’s Foot Cream Trials
The parties have agreed on a settlement in several class actions that had been filed against Vaso Active Pharmaceuticals, Inc. (OTCBB:VAPH; formerly Nasdaq:VAPH) and certain of its officers and directors by stockholders who purchased the company's common stock between December 11, 2003, and March 31, 2004. The actions claimed that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders sought to recover compensatory damages for the loss of value of their stock.
The action alleged that Vaso Active misrepresented its business and future prospects by claiming that independent clinical trials confirmed that its foot cream product "Termin8" was a remarkably effective cure for athlete's foot. The company allegedly represented that the clinical trials were conducted by independent physicians and reviewed by the New England Medical Center in Boston. Instead, the person who allegedly supervised the study was a lone podiatrist hand-picked by Vaso Active's parent company, BioChemics, Inc. Furthermore, the action alleges that the New England Medical Center did nothing more than analyze the statistical information gathered by BioChemics -- something the center does all the time for paying customers. In news articles, the medical center confirmed that it was unable to draw any conclusions about the effectiveness of the product, since it had no hand in selecting the patients and gathering the evidence.
On March 31, 2004, financial markets were stunned when the SEC halted the trading of Vaso Active stock. The SEC press release relating to the stoppage questioned the accuracy of assertions made in the company's press releases, annual report, registration statement, and public statements to investors. Prior to the disclosure of these adverse facts, the company had completed an IPO during December 2003 and a private placement during March 2004, generating over $15 million in proceeds.
The parties to the Agreements are now seeking the Court's preliminary approval of the settlements, following which joint notices of the settlements and claim forms will be sent to appropriate shareholders. Following fairness hearings on the settlements, which have not yet been scheduled, the Court still must decide whether to give final approval of the settlements.
