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Google Inc. Investor Files Lawsuit Against Directors In Connection With $500million Settlement

  • If you are purchased Google Inc. (PNASDAQ: GOOG) shares and presently continue to hold those NASDAQ:GOOG shares, you have certain options and you should contact the Shareholders Foundation, Inc.

  • To have your information reviewed for options and to receive notifications about this case, please send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.

Lawsuit Overview

Company
Google, Inc.
Security
NASDAQ: GOOG

Case Name
Google Shareholder Derivative Action 08/30/2011
Type of Lawsuit
Stockholder Derivative Action
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Summary

August 13, 2012 (Update) -- Case dismissed by a California federal judge; ruling the shareholder didn't make a proper demand before suing.
San Diego, Aug 31, 2011 (Shareholders Foundation) -- An investor in Google Inc. (NASDAQ: GOOG) shares filed a lawsuit against Google’s CEO and its board of directors over alleged breaches of fiduciary duties in connection with the recent $500million settlement with the Justice Department over allegations of prescription drug advertisements by Canadian online pharmacies.

According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties owed to GOOG stockholders by allowing Canadian online pharmacies to place advertisements for prescription drugs on its network, which lead to a $500 million settlement with the U.S. Department of Justice.

While Google Inc has performed financially exceptionally well for its investors in the past it recently agreed to a $500million settlement.

In fact, Google’s annual Total Revenue rose from $26.59billion in 2007 to $29.32billion in 2010 and its annual Net Income over the same time frame increased from $4.2billion in 07 to $8.5billion in 2010. Google’s second quarter Revenue rose from $6.8billion last year to $9.0billion this year and its second quarter Net Income increased from $1.84billion last year to $2.5billion this year.

Shares of Google Inc (GOOG) surged from $262.43 in November 08 to $630.08 in February 2011.

However, then on August 24, 2011 Google settled with the U.S. Department of Justice for $500million over allegations that Google allowed Canadian online pharmaceutical companies to place prescriptions drug advertisements on its network targeting consumers in the United States. The advertisements allegedly resulted in the illegal importation of prescription drugs into the U.S., according to the Justice Department. The $500million-number is reportedly based on revenues received by Google as well as the pharmacies involved.

The plaintiff alleges that Google’s CEO Larry Page and the company’s board knew or should have known it was illegal for pharmacies outside the U.S. to ship prescription drugs into the U.S. and that therefore the defendants breached their fiduciary duties. Furthermore the plaintiff claims that Google’s annual reports from 2003 to 2009 were false and misleading because it allegedly didn’t disclose the revenue from the improper advertising.