This wasn’t how it was supposed to go for Biovail Corp., Canada’s largest publicly traded drugmaker. Biovail was supposed to be the victim, the ill-used dupe of powerful hedge funds, analysts and bankers, whose short-selling scheme to spread false information about the company led to a plunge in its share price in 2003. And Biovail’s lawyers, respected litigators from Howrey and Kasowitz, Benson, Torres & Friedman, were supposed to be the ones to help the company prove it.
Mark Wegener, co-chair of Howrey’s global litigation practice, had been hired to defend Biovail in a shareholder class action in federal district court in New York. His job was to shift blame for the company’s disastrous market fall away from Biovail and its executives, including Chairman Eugene Melnyk. The company’s other lead outside counsel, Marc Kasowitz, played offense. After more than a year of investigation — which included shoe-leather sleuthing by his firm’s in-house detective agency — he had filed a 90-page racketeering suit in New Jersey state court. It was a document as detailed as it was audacious, lobbing charges against some of the most powerful financial figures on Wall Street.
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