Zicam Loss of Smell Problems Lead to Class Action Lawsuit by Investors
A securities class action lawsuit has been filed against Matrixx Initiatives, Inc. on behalf of investors over the company’s failure to disclose reports of problems with loss of smell from Zicam experienced by many users of the popular nasal gel and swab versions of their cold remedy.
The Matrixx Initiatives class action lawsuit was filed in U.S. District Court for the District of Arizona, alleging that the company violated federal securities laws by withholding information about hundreds of complaints received regarding Zicam smell problems. The complaint seeks damages for all investors who purchased Matrixx stock between December 22, 2007 and June 15, 2009.
The FDA warned consumers to stop using the over-the-counter cold remedy on June 15, after identifying more than 130 reports of people who lost their sense of smell, a condition known as anosmia. Matrixx subsequently issued a Zicam recall for two variations of the homeopathic product and disclosed that they were aware of about 800 consumer complaints that were never turned over to the FDA or disclosed to investors.
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Despite the Zicam smell side effects experienced by users, Matrixx Initiatives has continued to maintain that their products are safe.
The new securities Zicam class action lawsuit says that by withholding the reports, Matrixx Initiatives robbed investors of the opportunity to make informed investment decisions regarding the company’s future earnings potential. As a result of the recall, Matrixx Initiatives’ stocks plummeted from about $19 per share to less than $7 per share.
According to the FDA, Matrix Initiatives was required by federal law to report adverse reactions to their product and failed to do so. Inspectors estimate that approximately 3.6 out of every 100,000 users have experienced Zicam loss of smell problems, with reports peaking at 6.7 users per 100,000 units sold in 2007. The Securities Exchange Commission has also initiated an informal inquiry of the reporting problems.
In addition to the investor actions, Matrixx faces Zicam lawsuits filed on behalf of individuals who have experienced a loss of smell or taste after using the nasal gel or swabs. The loss of smell not only has a detrimental impact on a person’s quality of life, but could also pose a risk of life-threatening injury if they fail to smell smoke, gas or food that has gone rotten.
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