St. Jude Sues Muddy Waters, MedSec

The battle between St. Jude Medical and short-selling firm Muddy Waters and cybersecurity firm MedSec Holdings Inc. is heating up as the medical equipment firm today filed a lawsuit against the firms.

St. Jude saw its shares stumble last month when Muddy Waters announced a short-sell position on the medical device maker's stock due to security vulnerabilities in its heart pacemakers, implantable cardioverter-defibrillator devices, and theMerlin@Home monitoring device that communicates with them. 

MedSec, which discovered the security flaws, took the unusual and controversial path of working with Muddy Waters in its disclosure rather than reporting it directly to St. Jude. 

Reuters describes short-selling this way: "Short-sellers borrow shares and sell them in expectation the price will fall. When it does, the short-sellers buy back the shares, return them to the lender, pay borrowing fees and pocket the difference."

St. Jude maintains in its lawsuit that the firms spread inaccurate information about its products to influence its stock value and to score a profit.

Meanwhile, a Muddy Waters spokesman told Reuters that "It is not unusual for a company like this to try to silence its critics and we are always prepared to vigorously defend our right to criticize a company that puts its profits before its patients."

Read the full Reuters report here.