Hartcourt Companies (fka HRCT)

[CABRALEES]

OT: Biovail Alleges Stock Plot

NOT SAYING THIS HAPPENS HERE......JUST FIGURED IT INTERESTING.

By TSC Staff
2/23/2006 7:44 AM EST


Powerful hedge funds conspired with Wall Street analysts in an illegal plot to drive down shares of Biovail (BVF:NYSE - news - research - Cramer's Take) during 2003 and 2004, the Canadian drug company alleged in a lawsuit.

The civil suit, filed Wednesday in New Jersey, names SAC Capital Management and its founder, Steven Cohen; research shop Gradient Analytics and its predecessor company, Camelback Research; and Bank of America (BAC:NYSE - news - research - Cramer's Take) analyst David Maris, among others. Biovail alleges stock manipulation.

Shares of Biovail fell from more than $51 in June 2003 to below $15 in November 2004 amid a series of earnings misses, analyst downgrades and questions about its accounting practices. Questions were also raised about an October 2003 traffic accident that the company claimed caused it to miss quarterly profit targets.

The Securities and Exchange Commission opened an investigation into Biovail's accounting and financial reporting practices in November 2003. Biovail shares have steadily strengthened over the past 12 months, going from around $16 in February 2005 to a closing quote of $25.57 Wednesday.

In its suit, Biovail claims that SAC provided Camelback with negative and incorrect information about the company and paid Camelback to include it in its reports. Moreover, Biovail alleges, SAC got Camelback to delay publication of its reports while it built large, bearish positions in the company's stock.

Maris is also alleged to have made bearish calls on Biovail at SAC's direction.

An SAC spokesman called the allegations "defamatory" in press reports Thursday and said the hedge fund would vigorously defend itself. A spokesman for Camelback-successor Gradient said the suit is "completely false" and "malicious."

Gradient and Camelback are also named in a similar lawsuit filed last year by Overstock.com (OSTK:Nasdaq - news - research - Cramer's Take) against Rocker Partners, a hedge fund that owns slightly less than 5% of TheStreet.com (TSCM:Nasdaq - news - research - Cramer's Take), the owner of this Web site.