Abbott and certain of its executives are charged with failing to disclose material information during the Class Period, violating federal securities laws.
On February 17, 2022, the U.S. Food and Drug Administration (“FDA”) announced that its inspection of the Company’s Sturgis, Michigan facility, prompted by consumer complaints of infant illness, had yielded several positive contamination results for the Cronobacter sakazakii bacteria, linked to infant illnesses and death. On the same day, the Company, without mention of the FDA investigation, recalled certain infant formula products, including the popular brands Similac, Alimentum and EleCare, all manufactured in Sturgis. On this news, shares of Abbott declined by $3.79 per share, or 3.14%.
Then, on March 22, 2022, the FDA reported that, although not “final FDA determinations,” its most recent inspection conducted between January 31, 2022 and March 18, 2022 revealed that the Company failed to establish process controls “designed to ensure that infant formula does not become adulterated due to the presence of microorganisms in the formula or in the processing environment” and failed to “ensure that all surfaces that contacted infant formula were maintained to protect infant formula from being contaminated by any source.” On this news, shares of Abbott declined by an additional $4.97 per share, or 4%.
Finally, on June 8, 2022, it was reported that a whistleblower complaint identifying numerous serious examples of misconduct at Sturgis related to the above had been filed with the U.S. Occupational Safety & Health Administration (“OSHA”) in February 2021, and that OSHA had delivered that complaint to Abbott Laboratories and the FDA during the same month. On this news, shares of Abbott declined by an additional 3.5%, further damaging investors.