For years, Philips has withheld relevant information on failing respiratory devices from investors. Consequently investors have seen over €16 billion in stock market value evaporate. Investor association European Investors-VEB (‘VEB’) holds Philips liable for this.
Since 2015 Philips has got signals about the possibly deficient and harmful functioning of respiratory devices helping millions of patients sleep (and breathe). Particles of foam may break down during usage possibly causing serious health problems.
For a long period Philips has not shared this information and it has thereby recklessly dealt with the health of millions of patients. The past year and a half, the American health authority FDA has received tens of thousands of notifications of Philips’ deficient devices. In 168 cases the degraded pieces of foam have even been brought into connection with patients’ deaths.
Also, investors have systematically been informed incorrectly. Philips has thereby breached the law, and caused great damages.
VEB reproaches Philips that the company has not disclosed inside information in time. Had Philips communicated timely, transparently, and honestly, investors would have made a different assessment than buying shares in Philips for a – as it later turned out – artificially high price.
From the moment Philips first notified that there were large scale problems with respiratory devices – in April 2021 – Philips’ stock market value decreased by over €27 billion. VEB has calculated that damages exceeding €16 billion can directly be attributed to the deficient supply of information concerning the apnoea affair.
Grave concerns
Philips’ failing supply of information has resulted in misleading annual accounts, management reports, and press releases over the past years. Additionally, on behalf of investors, VEB has conveyed grave concerns to Philips because of the lacking of a solid administrative organisation and internal control framework. The management board has failed to exercise effective supervision on subsidiaries, among which the supplier of respiratory devices Respironics. The supervisory board has failed to fulfil its duty to oversee Philips’ management board.
VEB finds that there are sound reasons to doubt whether Philips has pursued a correct policy over the past years. VEB explicitly reserves the right to apply to the enterprise chamber of the Amsterdam Court of Appeal to launch an enquiry into the conduct of affairs at Philips since 2015.
VEB executive director Gerben Everts explains the step to hold Philips liable: ‘Philips is Dutch heritage with an illustrious past. For the company to have a successful future in healthcare, the problems with the respiratory devices must be brought to an adequate solution on all fronts.
The injured patients’ interests are paramount. VEB is convinced that Philips must subsequently compensate harmed investors to regain trust from all stakeholders.’
Philips has two weeks to engage in dialogue with VEB. (Former) investors in shares in Philips may register with VEB.