Valeant’s Latest Legal Threat Could Be Especially Costly

Valeant Pharmaceuticals International Inc. has been selling assets, paying down debt and riding a recovery of its shares from their lowest point last spring. But one big uncertainty -- its potential legal costs -- just got bigger.

Lord Abbett & Co., the mutual fund company, filed a securities fraud lawsuit against Valeant on Wednesday alleging that it bought the drug giant’s debt securities at an artificially high price because of misinformation provided by Valeant. The suit, filed in federal court in New Jersey and alleging violations of New Jersey’s racketeer influenced and corrupt organizations (RICO) law, represents a new and potentially costly legal attack on Valeant, which is already facing lawsuits over alleged manipulation of drug prices.