Staar Surgical (NSDQ:STAA) has reached a $7 million settlement deal to end an investor suit claiming that the company concealed problems at its California plant which resulted in an FDA warning letter, according to court documents posted this week.
The company reached the settlement with the certified class of investors after 3 years of litigation, according to court documents from the US District Court of the Central District of California.
In the class-certified case, lead plaintiff Edward Todd claimed that Staar, president & CEO Barry Caldwell, ex-CFO Deborah Andrews and current CFO Stephen Brown “made false and/or misleading statements and/or failed to disclose” the problems at the plant in Monrovia, Calif., according to court documents.
The warning letter stemmed from inspections in 2014 at the Monrovia plant where Staar manufactures its intraocular lenses. Inspectors cited missing design files for the several models of the Visian implantable lenses, insufficient record-keeping of design changes and transfers, lack of risk analysis documentation and inadequate customer complaint management, among others. More than anything else, investigators appeared to cite a lack of documentation and Staar’s failure to turn over necessary files.
STAA shares slid 11.3% to $14.91 apiece on the news. Although analysts at William Blair called the matter one of “innocent disorganization,” saying that the FDA warning shouldn’t affect the company’s operations going forward, Todd alleges that Staar and its management deliberately concealed the problems.