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Johnson & Johnson CEO sold stock ahead of asbestos report

On Behalf of | Feb 24, 2020 | Mesothelioma/Asbestos-Related Illness, Products Liability

As thousands of people wondered if their use of Johnson & Johnson talc products may have contributed to their cancers, the CEO of Johnson & Johnson was making $22 million from his sale of the company’s stock.

The revelation came to light during a trial at which the CEO was forced to testify, and it raises the question about how much the CEO knew. As Reuters reports, the sale was made two days after the news agency contacted Johnson & Johnson to report the findings of asbestos in its talc. The timing may amount to mere coincidence, but it may not sit right among people who have cancer.

What did the CEO really know?

In late January, Johnson & Johnson CEO Alex Gorsky was forced to testify in a New Jersey injury trial. Four mesothelioma victims had sued Johnson & Johnson. They claimed the company’s baby powder had exposed them to the asbestos that caused their cancers. Their parents had all used the powder to diaper them. The victims had already been awarded $37.2 million for their damages. However, Gorsky was brought in to testify as the plaintiffs’ lawyers argued for further punishment.

At heart was what Gorsky knew about the links between asbestos and J&J talc powders. As Reuters reported, he had personally responded to reports that the company had spent decades hiding the facts about asbestos and its talc powders. After the news broke, Gorsky personally vouched for the company’s products, but:

  • He testified that he had never read the documents the company had put together about potential asbestos contamination
  • J&J faces more than 16,000 lawsuits from people who claim their cancers were caused by asbestos in the company’s talc powders
  • Gorsky admitted he sold stock two days after Reuters had contacted the company about asbestos contamination—and shortly before the company took a $40 billion hit

Notably, Gorsky denied any wrongdoing in the sale. He noted that he had filed all the proper paperwork. He claimed he hadn’t been aware of the email from Reuters before he sold his stock. He also pointed out the stock would now be worth more if he had held onto it and that he had sold less than 10% of his stock.

To those who have cancer, this last point may come across like a slap in the face. Johnson & Johnson’s CEO made $22 million from the sale of company stock right before the value of the stock plummeted. And that sale represented less than one-tenth of his stock at the time. That remaining stock has since risen to an even higher value. And all this has happened while J&J lawyers and executives continue to argue they shouldn’t be held liable for those who have suffered.

The silver lining

The New Jersey Supreme Court forced Gorsky to testify, despite his desire to stay out of the courtroom. And the plaintiffs had already won a verdict by the time Gorsky testified.

For all Johnson & Johnson’s power, it hasn’t been able to escape the claims of asbestos contamination. The company continues to fight, but an ever-increasing number of victims have been able to reach some measure of justice.

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