Billionaire Frost, OPKO Execs Sued Over Leadership Diversity
Mar 6, 2021 14:43:40 GMT
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Post by gutset on Mar 6, 2021 14:43:40 GMT
Billionaire Frost, OPKO Execs Sued Over Leadership Diversity
By Hannah Albarazi
Law360 (March 5, 2021, 7:33 PM EST) -- An OPKO Health shareholder hit the biotech company's top brass, including its billionaire chairman Phillip Frost, with a derivative lawsuit in Florida federal court on Friday for allegedly falling short on its commitments to diversify its leadership team.
Top executives of the Miami-based medical test and diagnostics company have been "falsely assuring the investing public in SEC filings and in corporate governance documents that OPKO celebrates diversity and prides itself on its diverse staff and is committed to creating and maintaining a healthy workplace where discrimination is not tolerated," Sammy Lee said in his shareholder suit filed derivatively on behalf of OPKO Health Inc.
Yet despite those assurances, there are neither Black nor Latinx members on OPKO's board of directors, and there are no Black employees in management or leadership roles at the company, Lee contends.
Lee further attributes OPKO's lack of board member term limits to its "desire to keep Black, Latinx and other underrepresented individuals off of the board."
OPKO has violated federal and state laws regarding diversity and discrimination, the plaintiff said, doing so by "repeatedly refusing to nominate, appoint and/or hire Black or Latinx individuals or other underrepresented minorities to the board or Black individuals to the executive management team."
OPKO chairman and CEO Phillip Frost, the former chairman of Teva Pharmaceutical Industries Ltd. who is now in his 80s, is among the 10 OPKO top brass named as defendants in Friday's complaint, and whom Lee accuses of flouting fiduciary duties and violating the Securities Exchange Act of 1934.
Lee further alleges unjust enrichment, waste of corporate assets, abuse of control and gross mismanagement.
Frost has previously been named in other shareholder derivative suits following a U.S. Securities and Exchange Commission investigation into his business practices.
In 2018, the SEC sued OPKO, Frost and others for their alleged role in "three highly profitable 'pump-and-dump' schemes." The SEC alleged they manipulated stock prices in microcap companies, raking in more than $27 million for themselves and leaving investors holding "virtually worthless shares."
Investors in Cocrystal Pharma Inc., formerly known as BioZone Pharmaceuticals Inc., launched derivative suits of their own against Cocrystal's top ranks, naming Frost and others as defendants.
In 2019, OPKO Health, Frost and his trust, Frost Gamma Investments Trust, agreed to pay a $5 million civil penalty and over $400,000 in disgorgement to settle the SEC's allegations.
Cocrystal Pharma — where Frost remains a director — agreed in September 2020 to implement a series of corporate reforms to settle three derivative suits brought by shareholders over the alleged scheme that drove down the value of the company's stock.
Friday's shareholder derivative suit against OPKO follows a wave of similar suits in 2020 in which shareholders targeted current and former directors and officers of large U.S. companies.
Shareholders have similarly alleged that social media giant Facebook Inc., telecommunications company Qualcomm Inc., cybersecurity company NortonLifeLock Inc., software heavyweight Oracle Corp., retailer behemoth The Gap Inc., beverage maker Monster Beverage Corp. and technology conglomerate Cisco Systems Inc. all fell short on diversity.
Similar to demands in the Facebook and Oracle complaints, Lee is demanding OPKO end its longtime relationship with auditor Ernst & Young.
He said OPKO has failed to maintain internal controls and slammed its repeated use of Ernst & Young LLP, claiming it to be neither independent nor effective at ensuring the adequacy of OPKO's internal controls.
At least one Black employee has also sued OPKO alleging racial discrimination by its subsidiary, BioReference, Lee states.
OPKO, in three annual proxy statements to shareholders, issued misleading statements to investors asserting its purported commitment to respecting and safeguarding individual dignity and autonomy "while doing very little to curb discrimination occurring at the company or its subsidiaries," Lee states.
The discriminatory misconduct is not only illegal and unethical, but is not good for business, he said, pointing to a 2018 McKinsey & Company report finding that companies with the most diverse boards are 43% more likely to see higher profits.
Representatives for OPKO, BioReference, Ernst & Young and Lee did not immediately respond to requests for comments Friday.
Lee is represented by Jose D. Sosa of The Law Office of Jose D. Sosa PC and Phillip Kim of The Rosen Law Firm PA.
Counsel information for OPKO Health could not immediately be determined Friday.
The case is Sammy Lee, derivatively on behalf of OPKO Health Inc. v. Phillip Frost et al., case number 1:21-cv-20885, in the U.S. District Court for the Southern District of Florida.
By Hannah Albarazi
Law360 (March 5, 2021, 7:33 PM EST) -- An OPKO Health shareholder hit the biotech company's top brass, including its billionaire chairman Phillip Frost, with a derivative lawsuit in Florida federal court on Friday for allegedly falling short on its commitments to diversify its leadership team.
Top executives of the Miami-based medical test and diagnostics company have been "falsely assuring the investing public in SEC filings and in corporate governance documents that OPKO celebrates diversity and prides itself on its diverse staff and is committed to creating and maintaining a healthy workplace where discrimination is not tolerated," Sammy Lee said in his shareholder suit filed derivatively on behalf of OPKO Health Inc.
Yet despite those assurances, there are neither Black nor Latinx members on OPKO's board of directors, and there are no Black employees in management or leadership roles at the company, Lee contends.
Lee further attributes OPKO's lack of board member term limits to its "desire to keep Black, Latinx and other underrepresented individuals off of the board."
OPKO has violated federal and state laws regarding diversity and discrimination, the plaintiff said, doing so by "repeatedly refusing to nominate, appoint and/or hire Black or Latinx individuals or other underrepresented minorities to the board or Black individuals to the executive management team."
OPKO chairman and CEO Phillip Frost, the former chairman of Teva Pharmaceutical Industries Ltd. who is now in his 80s, is among the 10 OPKO top brass named as defendants in Friday's complaint, and whom Lee accuses of flouting fiduciary duties and violating the Securities Exchange Act of 1934.
Lee further alleges unjust enrichment, waste of corporate assets, abuse of control and gross mismanagement.
Frost has previously been named in other shareholder derivative suits following a U.S. Securities and Exchange Commission investigation into his business practices.
In 2018, the SEC sued OPKO, Frost and others for their alleged role in "three highly profitable 'pump-and-dump' schemes." The SEC alleged they manipulated stock prices in microcap companies, raking in more than $27 million for themselves and leaving investors holding "virtually worthless shares."
Investors in Cocrystal Pharma Inc., formerly known as BioZone Pharmaceuticals Inc., launched derivative suits of their own against Cocrystal's top ranks, naming Frost and others as defendants.
In 2019, OPKO Health, Frost and his trust, Frost Gamma Investments Trust, agreed to pay a $5 million civil penalty and over $400,000 in disgorgement to settle the SEC's allegations.
Cocrystal Pharma — where Frost remains a director — agreed in September 2020 to implement a series of corporate reforms to settle three derivative suits brought by shareholders over the alleged scheme that drove down the value of the company's stock.
Friday's shareholder derivative suit against OPKO follows a wave of similar suits in 2020 in which shareholders targeted current and former directors and officers of large U.S. companies.
Shareholders have similarly alleged that social media giant Facebook Inc., telecommunications company Qualcomm Inc., cybersecurity company NortonLifeLock Inc., software heavyweight Oracle Corp., retailer behemoth The Gap Inc., beverage maker Monster Beverage Corp. and technology conglomerate Cisco Systems Inc. all fell short on diversity.
Similar to demands in the Facebook and Oracle complaints, Lee is demanding OPKO end its longtime relationship with auditor Ernst & Young.
He said OPKO has failed to maintain internal controls and slammed its repeated use of Ernst & Young LLP, claiming it to be neither independent nor effective at ensuring the adequacy of OPKO's internal controls.
At least one Black employee has also sued OPKO alleging racial discrimination by its subsidiary, BioReference, Lee states.
OPKO, in three annual proxy statements to shareholders, issued misleading statements to investors asserting its purported commitment to respecting and safeguarding individual dignity and autonomy "while doing very little to curb discrimination occurring at the company or its subsidiaries," Lee states.
The discriminatory misconduct is not only illegal and unethical, but is not good for business, he said, pointing to a 2018 McKinsey & Company report finding that companies with the most diverse boards are 43% more likely to see higher profits.
Representatives for OPKO, BioReference, Ernst & Young and Lee did not immediately respond to requests for comments Friday.
Lee is represented by Jose D. Sosa of The Law Office of Jose D. Sosa PC and Phillip Kim of The Rosen Law Firm PA.
Counsel information for OPKO Health could not immediately be determined Friday.
The case is Sammy Lee, derivatively on behalf of OPKO Health Inc. v. Phillip Frost et al., case number 1:21-cv-20885, in the U.S. District Court for the Southern District of Florida.