Just yesterday, New York Attorney General (AG) Letitia James issued a statement alleging that Teva Pharmaceuticals Industries (NYSE:TEVA) “lied to evade accountability” for its role in the state’s opioid crisis. This development could lead to litigation against the company. However, TEVA stock is still up more than 2% this morning.
To clarify, Teva Pharmaceutical Industries is the Israel-based parent company of Teva Pharmaceuticals USA. According to James, the Teva parent company provided sworn testimony that it had transacted no business in the U.S. and had “no role in its American opioids business.”
Yet, James alleges that the Teva parent company was, in fact, a “primary decision maker” for its U.S. subsidiary. The AG also claims the parent has used a “complex web of shell corporations to transfer significant funds out of Teva USA and into offshore accounts it owns and control.”
Consequently, James wants New York’s court to “vacate its previous dismissal” of litigation against Teva. Furthermore, James would like the Office of the Attorney General (OAG) to be allowed to investigate the company’s alleged role in the crisis.
What’s Happening With TEVA Stock?
Clearly, James is on a quest to pursue legal action against Teva Pharmaceuticals. One might assume that TEVA stock would crash in response to this development. However, Wall Street can be full of surprises.
By 11:00 a.m. Eastern, TEVA stock was actually up 2.5%. Perhaps, financial traders believe legal action against Teva will be a difficult process. The AG would, presumably, have to prove that Teva Pharmaceuticals participated in New York’s opioid crisis. That may be a tall order.
In any event, AG Letitia James is clearly prepared to go to the mat. James warned:
“I made a promise to New Yorkers that we would do everything in our power to hold drug manufacturers and distributors accountable for their role in the opioid crisis that has devastated our communities.”
This news could certainly have future implications for investors of TEVA stock. Yet, there may also be considerations pertaining to other pharmaceutical stocks. Traders should continue to monitor the situation for further developments.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
