Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 1 of 169
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`Carol V. Gilden (admitted pro hac vice)
`COHEN MILSTEIN SELLERS & TOLL PLLC
`190 South LaSalle Street
`Suite 1705
`Chicago, IL 60603
`Telephone: (312) 357-0370
`Facsimile: (312) 357-0369
`Email: cgilden@cohenmilstein.com
`
`Nicole Lavallee (SBN 165755)
`Jeffrey Miles (SBN 293869)
`BERMAN TABACCO
`44 Montgomery Street, Suite 650
`San Francisco, CA 94104
`Telephone: (415) 433-3200
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`Facsimile: (415) 433-6382
`Email: nlavallee@bermantabacco.com
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`jmiles@bermantabacco.com
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`Attorneys for Lead Plaintiffs and Additional
`Named Plaintiff
`
`[Additional Counsel on Signature Page]
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
` Case No: 3:20-cv-04737-RS
`
`AMENDED CLASS ACTION COMPLAINT
`
`CLASS ACTION
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`3 – 17th Floor
`Courtroom:
`Judge: Richard Seeborg
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`JURY TRIAL DEMANDED
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`SHEET METAL WORKERS’ NATIONAL
`PENSION FUND and INTERNATIONAL
`BROTHERHOOD OF TEAMSTERS
`LOCAL NO. 710 PENSION FUND,
`individually and as Lead Plaintiffs on behalf
`of all others similarly situated, and
`
`INTERNATIONAL UNION OF
`OPERATING ENGINEERS PENSION
`FUND OF EASTERN PENNSYLVANIA
`AND DELAWARE, individually and as
`Named Plaintiff, on behalf of all others
`similarly situated,
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`
`Plaintiffs,
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`vs.
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`BAYER AKTIENGESELLSCHAFT,
`WERNER BAUMANN, WERNER
`WENNING, LIAM CONDON,
`JOHANNES DIETSCH, and WOLFGANG
`NICKL,
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`Defendants.
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 2 of 169
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`I.
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`II.
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`TABLE OF CONTENTS
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`INTRODUCTION .............................................................................................................. 1
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`JURISDICTION AND VENUE AND INTRADISTRICT ASSIGNMENT.................... 14
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`III.
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`PARTIES .......................................................................................................................... 18
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`A.
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`B.
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`C.
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`Plaintiffs ................................................................................................................ 18
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`Defendants ............................................................................................................ 19
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`Relevant Non-Parties ............................................................................................ 21
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`IV.
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`FACTUAL BACKGROUND AND SUBSTANTIVE ALLEGATIONS ........................ 22
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`A.
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`B.
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`C.
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`D.
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`E.
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`F.
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`Bayer and its Business .......................................................................................... 22
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`Bayer Hastily Seizes the Opportunity to Acquire Monsanto in Largest
`Foreign Acquisition in German History ............................................................... 24
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`Defendants Recognized that Monsanto’s Major Red Flags Required an
`Extensive Due Diligence Investigation ................................................................. 27
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`1.
`
`2.
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`The Dramatic Due Diligence Red Flag -- Monsanto’s History of
`Product Liability Litigation....................................................................... 29
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`Monsanto’s Growing Legal Exposure to Roundup Litigation .................. 31
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`Defendants Present the Merger to Investors as an Unparalleled
`Opportunity for Shareholder Value and Promise an Extensive Due
`Diligence Investigation ......................................................................................... 33
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`After Signing the Merger Agreement in September 2016, Defendants
`Reassured Investors that the Due Diligence Investigation Would Continue
`Through the Lengthy Pre-Closing Period ............................................................. 38
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`In the Pre-Closing Period Prior to June 2018, Damaging Internal
`Monsanto Documents Began to Emerge............................................................... 40
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`1.
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`2.
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`March 2017 Damaging Monsanto Papers Emerge ................................... 40
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`After the Release of the Monsanto Papers, Defendants Falsely
`Reaffirm the Strength of Their Due Diligence and Tout the
`Benefits of the Merger .............................................................................. 42
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`G.
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`Almost Immediately After Closing the Merger, Jury Verdicts Begin to
`Reveal Bayer’s Massive Exposure to Roundup Liability ..................................... 44
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`1.
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`2.
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`3.
`
`4.
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`During Johnson Trial, Monsanto’s Internal Documents Emerge as
`Central to Plaintiff’s Case ......................................................................... 44
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`Johnson Verdict Awards Plaintiff $289 Million After Finding
`Monsanto Ignored Health Risks of Roundup............................................ 46
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`Defendants Admit They Never Looked at Monsanto’s Internal
`Documents, but Reassure Investors that Reevaluation of Roundup
`Litigation Risk is Unnecessary ................................................................. 48
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`Johnson Court Rejects Monsanto’s Request to Overturn Verdict,
`Finding “No Legal Basis to Dispute” Jury’s Conclusions ........................ 52
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`No: 3:20-cv-04737 (RS) - CLASS ACTION COMPLAINT
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 3 of 169
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`H.
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`I.
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`K.
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`M.
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`N.
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`O.
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`P.
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`5.
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`6.
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`In the Hardeman Trial, Plaintiff’s Case Turns on Monsanto’s
`Internal Documents Showing Roundup is More Toxic than
`Glyphosate Alone...................................................................................... 53
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`The Hardeman Jury Awards $80 Million to Plaintiff, Finding
`Monsanto Consciously Disregarded Public Safety by Concealing
`Roundup’s Health Risks ........................................................................... 55
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`Unbeknownst to the Market, Defendants Internally Acknowledged that the
`Monsanto Due Diligence Investigation Was Potentially Inadequate ................... 56
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`In Bid to Prevent Shareholder Revolt, Defendants Present Expert Reports
`to Shareholders as Validating the Failed Due Diligence Investigation ................ 58
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`The Pilliod Jury Renders Massive $2 Billion Verdict After Plaintiffs
`Present Dozens of Additional Internal Documents Showing Monsanto’s
`Misconduct ............................................................................................................ 61
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`In An Effort to Regain Shareholder Support, Defendants Agree to An
`Audit of Bayer’s Due Diligence Practices and to Release Linklaters and
`Habersack Reports as Confirmation of the Adequacy of its Due Diligence......... 63
`
`Defendants Admit that they Misled Investors About the Scientific
`Evidence on Roundup’s Cancer Risks .................................................................. 65
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`The Linklaters and Habersack Reports Establish that Prior to Signing the
`Merger Agreement, Defendants Failed to Examine Any Internal
`Documents Related to Roundup Liability Risks ................................................... 67
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`Bayer Announces $10.9 Billion Settlement of Roundup Litigation ..................... 71
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`Bayer’s Proposed Settlement Quickly Falls Apart ............................................... 72
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`Bayer Fraudulently Understated Liabilities, Overstated Profits, and Failed
`to Disclose Material Contingencies ...................................................................... 74
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`1.
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`2.
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`3.
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`Accounting and Reporting Standards Applicable to Bayer ...................... 74
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`Specific Accounting Standards Relevant to Bayer ................................... 74
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`Bayer Had Actual Knowledge from August 13, 2018 to July 6,
`2020 that its Financial Statements Were Materially False and
`Misleading................................................................................................. 78
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`Q.
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`Post-Class Period Events ...................................................................................... 80
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`1.
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`California Appeals Court Confirms that Defendants Misled
`Investors About the Roundup Liability Risks ........................................... 80
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`V.
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`FALSE AND MISLEADING STATEMENTS AND OMISSIONS................................ 82
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`A.
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`Defendants’ False and Misleading Statements About the Due Diligence
`Investigation of Monsanto .................................................................................... 82
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`1.
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`2.
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`3.
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`4.
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`Defendants’ False and Misleading Statements and Omissions
`Before the Signing of the Merger Agreement........................................... 82
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`Defendants’ False and Misleading Statements About the Results of
`the Pre-Signing Due Diligence Investigation ........................................... 83
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`Defendants’ False and Misleading Statements About the Due
`Diligence Investigation Prior to the Closing the Merger .......................... 87
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`Defendants’ False and Misleading Statements After the Closing of
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`the Merger About the Adequacy of the Due Diligence
`Investigation .............................................................................................. 91
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`B.
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`Defendants’ False and Misleading Statements After Closing the Merger
`About Bayer’s Access to Monsanto’s Internal Documents .................................. 97
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`1.
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`Defendants’ False and Misleading Statements About Bayer’s
`Access to Monsanto’s Internal Documents Under the Hold
`Separate Order .......................................................................................... 97
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`C.
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`Defendants’ False and Misleading Statements About the Safety and
`Cancer Risks of Roundup and Glyphosate ......................................................... 100
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`1.
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`2.
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`Defendants’ False and Misleading Statements about the Relative
`Safety of Roundup Compared to Glyphosate ......................................... 100
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`Defendants’ False and Misleading Statements About the Weight of
`the Scientific Evidence of Roundup’s Safety ......................................... 101
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`D.
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`Defendants Made False Statements and Omissions About Bayer’s
`Accounting and its Financial Results and Condition .......................................... 108
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`1.
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`2.
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`3.
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`4.
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`5.
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`6.
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`7.
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`8.
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`9.
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`Defendants’ False and Misleading Statements in Bayer’s Periodic
`Reports Through June 2020 .................................................................... 108
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`Interim Financial Statements for Q2 2018 .............................................. 109
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`Interim Financial Statements for Q3 2018 .............................................. 111
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`2018 Annual Financial Statements ......................................................... 112
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`Quarterly Statement for Q1 2019 ............................................................ 116
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`Half-Year Financial Report for 2019 ...................................................... 117
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`Quarterly Statement for Q3 2019 ............................................................ 118
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`2019 Annual Financial Statements ......................................................... 120
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`Quarterly Statement for Q1 2020 ............................................................ 123
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`10.
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`The Truth Comes Out in Bayer’s Half-Year Financial Report for
`2020......................................................................................................... 125
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`11.
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`Defendants’ Other False and Misleading Statements ............................. 128
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`VI.
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`ADDITIONAL ALLEGATIONS SUPPORTING SCIENTER ..................................... 130
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`A.
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`B.
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`C.
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`D.
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`E.
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`F.
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`Defendants Knowledge or Reckless Disregard of Legal and Reputational
`Risks Prior to September 14, 2016 Support a Strong Inference of Scienter ....... 131
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`Defendants Knowledge or Reckless Disregard of Roundup Liability Risks
`from September 14, 2016 through June 7, 2018 ................................................. 132
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`Defendants Knowledge or Reckless Disregard of Roundup Liability Risks
`from June 8, 2018 to June 24, 2020 .................................................................... 133
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`Defendants’ Public Statements Regarding the Scientific Evidence on the
`Safety of Glyphosate Support a Strong Inference of Scienter ............................ 133
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`Defendants’ Admission that They Never Reviewed Monsanto’s Internal
`Documents Supports a Strong Inference of Scienter .......................................... 134
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`The Magnitude of the Glyphosate-Related Costs Supports a Strong
`Inference of Scienter ........................................................................................... 134
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 5 of 169
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`Defendant Baumann Acted with Scienter ........................................................... 135
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`Defendant Wenning Acted with Scienter ........................................................... 135
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`Defendant Condon Acted with Scienter ............................................................. 136
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`Defendant Dietsch Acted with Scienter .............................................................. 136
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`Defendant Nickl Acted with Scienter ................................................................. 136
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`VII. LOSS CAUSATION AND ECONOMIC LOSS ............................................................ 137
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`VIII. THE PRESUMPTION OF RELIANCE ......................................................................... 141
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`IX.
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`THE INAPPLICABILITY OF STATUTORY SAFE HARBOR .................................. 143
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`8
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`X.
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`CLASS ACTION ALLEGATIONS ............................................................................... 145
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`XI.
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`CLAIMS FOR RELIEF .................................................................................................. 147
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`COUNT I .................................................................................................................................... 147
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`COUNT II ................................................................................................................................... 149
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`XII.
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`PRAYER FOR RELIEF ................................................................................................. 150
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`XIII.
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`JURY TRIAL DEMAND ............................................................................................... 151
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 6 of 169
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`Court-Appointed Lead Plaintiffs Sheet Metal Workers’ National Pension Fund and
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`International Brotherhood of Teamsters Local No. 710 Pension Fund (“Lead Plaintiffs”), along
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`with additional named plaintiff International Union of Operating Engineers Pension Fund of
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`Eastern Pennsylvania and Delaware (collectively, “Plaintiffs”), by and through their undersigned
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`counsel, bring this Complaint individually, and on behalf of a class of similarly situated persons
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`and entities, against Defendant Bayer Aktiengesellschaft (“Bayer” or the “Company”) and
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`Defendants Werner Baumann, Werner Wenning, Liam Condon, Johannes Dietsch, and Wolfgang
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`Nickl (together, the “Individual Defendants,” and collectively with Bayer, the “Defendants”).
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`Plaintiffs allege the following based upon personal knowledge as to those allegations
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`concerning Plaintiffs and, as to all other matters, based upon the investigation of Lead Counsel,
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`which included, without limitation: (i) review and analysis of public filings made by Bayer and
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`The Monsanto Company (“Monsanto”) with government regulators; (ii) review and analysis of
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`press releases and other publications, including those disseminated by certain of the Defendants
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`and other related non-parties; (iii) review of news articles; (iv) review of materials and evidence
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`produced by Bayer and Monsanto in other state and federal litigation; (v) interviews with former
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`employees of Bayer and Monsanto, its affiliates and predecessors, and other third parties; (vi)
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`consultation with individuals with expertise in due diligence, accounting and audit procedures, and
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`damages; and (vii) complaints filed against Bayer and Monsanto. While multiple sources of
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`evidence are already pleaded in this Complaint that adequately support the claims alleged herein,
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`Plaintiffs believe that substantial additional evidentiary support exists for the allegations herein
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`that will be revealed after Plaintiffs have a reasonable opportunity to conduct discovery.
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`I.
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`INTRODUCTION
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`
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`This is a federal securities class action under Sections 10(b) and 20(a) of the
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`Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 brought on behalf of
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 7 of 169
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`all persons or entities that purchased or otherwise acquired Bayer’s publicly traded American
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`Depositary Receipts (“ADRs”) (Ticker: BAYRY; CUSIP: 506921907) from May 23, 2016 and
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`July 6, 2020, inclusive (the “Class Period”), and were damaged as a result.
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`In the spring of 2016, Bayer was gripped by fear of missing out during a frenzy of
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`consolidation by its agrochemical competitors, but with few acquisition options of its own still
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`available. As the Company would later acknowledge, the only remaining option was Monsanto,
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`the American agrochemical giant widely described as “the most hated company in the world.” See
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`Alex Planes, Why Is Monsanto the Most Hated Company in the World?, The Motley Fool (June 8,
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`2013; updated Oct. 11, 2018), https://www.fool.com/investing/general/2013/06/08/why-is-
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`monsanto-the-most-hated-company-in-the-worl.aspx. The news that Bayer had made a $62 billion
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`all-cash offer to Monsanto came as “a huge shock to investors,” and sent the price of Bayer ADRs
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`plunging by more than 7%, from a close of $27.03 per share on May 18, 2016 to $24.94 per share
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`on May 19, 2016. 1 Investors worried about the massive price tag of the deal, which was larger
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`than any acquisition in German history and would require Bayer to take on tens of billions of
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`dollars of additional debt. There was, however, an additional concern: Bayer would also be
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`assuming the considerable risks of acquiring a company with an infamous reputation.
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`Monsanto’s reputation grew out of a long history of concealing the health risks of
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`its
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`chemical
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`products—such
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`as
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`polychlorinated
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`biphenyls
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`(“PCBs”),
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`dichlorodiphenyltrichloroethane (“DDT”), and Agent Orange—which led to Monsanto paying
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`hundreds of millions of dollars in toxic tort settlements. These settlements occurred after internal
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`Monsanto documents emerged, revealing that Monsanto knew of and actively concealed or
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`1 For the purposes of this Class Action Complaint, all references to prices of Bayer ADRs are
`split adjusted unless otherwise noted.
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 8 of 169
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`misrepresented specific health risks associated with these products, making Monsanto “one of the
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`most derided names in corporate history.” Phil Serafino and Aaron Kirchfield, Monsanto Name
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`Hated by Anti-GMO Forces May Vanish in Bayer Deal, Bloomberg (May 23, 2016),
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`https://www.bloomberg.com/news/articles/2016-05-23/monsanto-name-hated-by-anti-gmo-
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`forces-may-vanish-in-bayer-deal.
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`Monsanto’s history of concealing the adverse health risks of its major products was
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`a particularly significant “red flag”2 to defendant Bayer. While Bayer was allegedly conducting its
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`due diligence in 2016, Monsanto was embroiled in over 120 toxic tort cases, in which the plaintiffs
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`alleged that exposure to Roundup—Monsanto’s flagship and best-selling herbicide—caused non-
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`Hodgkin’s lymphoma (“NHL”), and that Monsanto had knowingly concealed Roundup’s toxicity
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`(the “Roundup Litigation”). The allegations in these cases closely mirrored the misconduct that
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`had been alleged in the PCB and dioxin toxic tort cases Monsanto had faced for years.
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`The Roundup cases had been filed after March 2015, when the International
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`Agency for Research on Cancer (“IARC”), an agency of the World Health Organization (“WHO”)
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`composed of independent research scientists, released a 92-page monograph (the “IARC
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`Monograph”) that concluded that glyphosate—the primary active ingredient in Roundup—is
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`“probably carcinogenic to humans.”
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`These Roundup cases struck at the core of Monsanto’s value because Monsanto’s
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`sales and profits were derived not just from its sales of the Roundup herbicide, but also from the
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`substantial sales of seeds that would tolerate Roundup and other glyphosate herbicides.
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`2 FINRA defines “red flags” as “any information that it encounters that . . . would alert a prudent
`person
`to conduct further
`inquiry.” FINRA Notice 10-22. https://www.finra.org/rules-
`guidance/notices/10-22.
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 9 of 169
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`Each of these Roundup cases also posed a potential financial risk to Bayer because
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`the plaintiffs in those cases sought to recover both compensatory damages, based on the economic
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`harm from their cancer, and punitive damages, on the theory that Monsanto consciously
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`disregarded evidence of Roundup’s cancer risks going back decades. This latter element of
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`potential punitive damages thus turned very specifically on the information in Monsanto’s files
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`that might show its knowledge and concealment of cancer risks associated with glyphosate and
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`Roundup.
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`Given these facts and Monsanto’s past corporate misconduct, it was essential that
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`Bayer conduct meaningful due diligence as to the reputational and financial risk of the Roundup
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`Litigation by examining Monsanto’s files to determine if Monsanto had—as it had with its other
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`products—known of and concealed Roundup’s health and cancer risks.
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`However, as investors learned only years later, this essential due diligence was
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`never performed. Indeed, the internal Monsanto documents that became the centerpiece of the
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`Roundup trials were never reviewed or even requested by Defendants as part of their due diligence.
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`As Defendants later admit, Bayer’s due diligence investigation of the Roundup liability risks was
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`limited exclusively to memoranda by a U.S. law firm based on publicly-available documents and
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`statements from Monsanto’s representatives that they “expected to prevail” in the lawsuits.
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`The enormity of this due diligence failure was compounded by the fact that at the
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`very same time Bayer was purportedly conducting its due diligence in the summer and fall of 2016,
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`Monsanto was already segregating and producing relevant documents in a multidistrict litigation
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`(“MDL”) overseen by U.S. District Judge Vince Chhabria of the Northern District of California,
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`which was comprised of all the federal Roundup cases (the “Roundup MDL”). In fact, Monsanto
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`No: 3:20-cv-04737 (RS) - CLASS ACTION COMPLAINT
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 10 of 169
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`had produced at least 3.5 million pages of documents by October 31, 2016—yet none of these
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`documents were ever examined by Bayer.
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`Rather than admit the absence of any meaningful due diligence of the risks
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`attendant with the Roundup Litigation, Defendants did the opposite. Defendants told investors they
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`would conduct “extensive due diligence” and that they fully understood the risks and potential
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`legal exposure of the Bayer-Monsanto merger (the “Merger”), including any risks related to
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`Monsanto’s Roundup business. When Bayer announced in September 2016 that it purportedly
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`completed its due diligence and signed a merger agreement with Monsanto, Defendants told
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`investors that their due diligence investigation had “confirmed” and “verified” the substantial
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`benefits and low risks of the Merger with no mention at all of any risks attendant with the Roundup
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`Litigation.
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`Such assurances mattered to Bayer’s shareholders because they had already
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`witnessed the consequences of Bayer’s prior ineffective due diligence. In 2014, Bayer had
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`completed its disastrous acquisition of Merck & Co.’s over-the-counter (“Merck OTC”) drug
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`business, which Defendants admitted in September 2016 had been unsuccessful because of Bayer’s
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`failure to detect that the Merck OTC business was worth hundreds of millions of dollars less than
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`presented. In short, Defendants assured investors that, unlike its due diligence investigation of
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`Merck OTC, Bayer’s due diligence investigation of Monsanto fully and thoroughly assessed the
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`risk of acquiring Monsanto. Unfortunately, all of these assurances were blatantly false.
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`But Defendants had plenty of time to conduct due diligence, even after they signed
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`the Merger agreement on September 14, 2016. Because the Merger was a massive and complicated
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`cross-border acquisition that required antitrust approval from more than 30 jurisdictions, Bayer
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`did not anticipate closing the deal until the end of 2017, with an agreed upon outside date in June
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 11 of 169
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`2018. Defendants told investors that Bayer would have more than a year (if not longer) before
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`closing the deal to compare their expectations with Monsanto’s continued stand-alone performance
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`and assess the risks and benefits of the Merger. In short, Defendants repeatedly led investors to
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`believe that Bayer had thoroughly and extensively investigated Monsanto’s legal and reputational
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`exposure and would continue to do so through the closing of the merger in June 2018.
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`However, once again, Defendants’ assurances were blatantly false. In fact, even as
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`damaging internal Monsanto documents from the Roundup cases were leaked to the public,
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`Defendants did not seek to examine Monsanto’s documents or disclose their prior due diligence
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`failures. In March 2017, internal documents produced through the Roundup trials (which would
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`later become known as the “Monsanto Papers”) revealed that Monsanto had known about
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`glyphosate’s potential toxicity for years and had aggressively fought to conceal the risks from
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`regulators and the public.
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`Although Defendants acknowledged Monsanto’s unfavorable reputation and
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`history of misconduct, Defendants continually insisted that Bayer’s due diligence investigations
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`had “scrutinized and reviewed” all the aspects of the Merger and uncovered “no evidence
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`whatsoever” that would cause any concerns, even after the Monsanto Papers were released.
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`Defendants emphasized that unlike the Merck OTC acquisition, Monsanto had gone “out of [its]
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`way to provide us with transparency, data and visibility to the most critical questions we had.”
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`Analysts were largely convinced, with most voicing little concern about the ongoing Roundup
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`Litigation.
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`On May 29, 2018, federal antitrust regulators approved the Merger. One week later,
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`on June 7, 2018, Bayer closed the Merger, with the two companies set to begin integration
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`following Bayer’s completion of its divestitures. At that time, Defendants assured the market that
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 12 of 169
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`nothing had changed since Bayer had announced plans to purchase Monsanto in May 2016, and
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`Defendant Baumann told investors that the Merger was “just as attractive today as we assessed it
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`be two years ago.”
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`On June 19, 2018, CBS reported the commencement of the Johnson v. Monsanto
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`Company trial (the “Johnson Case”), describing it as a bellwether case that could lead to the filing
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`of “thousands” of additional Roundup cases. CBS also reported that the plaintiff, Johnson, had
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`stated he could show scientific evidence that his exposure to Roundup caused his cancer and that
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`Monsanto allegedly knew about the link, failed to warn people, and buried evidence from the
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`public. Following this story, Bayer’s ADR price fell from a close of $31.35 per share on June 18,
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`2018, to a close of 28.60 per share on June 21, 2018, representing a decline of 8.8%.
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`Two months later, on August 10, 2018, the California jury in Johnson concluded
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`that the Plaintiff’s exposure to Roundup was a “substantial factor” in causing his NHL and that
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`Monsanto acted with “a conscious disregard for public safety,” and awarded him $39 million in
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`compensatory damages and $250 million in punitive damages.
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`The jurors later explained that they were persuaded in his favor after reviewing
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`evidence from Monsanto’s own files that it had known and concealed adverse studies of glyphosate
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`and potentially manipulated academic research and regulators. The jury’s verdict in Johnson
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`shocked the investment community who, buoyed by Defendants’ confidence that there was no
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`evidence of Monsanto’s misconduct, had expected the jury to rule in Monsanto’s favor. On the
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`next trading day, the price of Bayer ADRs plunged to a seven-year low, falling by $2.92 from a
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`close of $26.59 per share on August 10, 2018, to open at $23.67 per share on August 13, 2018,
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`representing a decline of 11.0%.
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`Case 3:20-cv-04737-RS Document 47 Filed 01/19/21 Page 13 of 169
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`Following the verdict, Defendants remained defiant and insisted that the ruling
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`would be overturned on appeal or in post-trial proceedings. They announced to investors that the
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`jury’s verdict was contrary to “the weight of the scientific evidence” and the “conclusions of
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`regulators around the world” that glyphosate is safe. When analysts asked whether Defendants had
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`examined Monsanto’s internal documents prior to the Merger’s closing, Defendants admitted for
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`the first time that they had not done so, claiming that a “hold separate” order set in place by the
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`Department of Justice in May 2018 (“the Hold Separate Order”) prevented them from doing so.
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`Defendants then reassured investors that, since they had access to Monsanto’s
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`internal documents after the Hold Separate Order was lifted, they were assured that there were no
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`documents that would “qualify as a smoking gun” and that the documents admitted at trial were
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`“taken out of context.” In short, Defendants led investors to believe that Monsanto’s liability
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`turned almost exclusively on determinations by regulators, and that there were no additional
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`internal documents that would be revealed that would increase Monsanto’s risk of liability. But
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`these assurances too were soon revealed to be false.
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`In an attempt to further assuage investor concerns, Defendants also began making
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`a series of new false and misleading statements. Beginning in August 2018, Defendants claimed
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`that there was ce