There was a development this week in the legal proceedings between Biovail and a group of investors it is suing. And Biovail would desperately like you to know that it's good news for its case.

Here's a refresher on the suit: Biovail, a pharmaceutical company best known for making the drug Wellbutrin, filed a lawsuit early last year against a group of defendants including the hedge fund SAC Capital and its owner Stephen Cohen. The fund, Biovail alleges, helped to ghostwrite negative research published by Camelback Research Alliance, which is now known as Gradient Analytics, as well as other research outlets. The purpose was to drive Biovail's stock down, earning profits for the investors who had short positions in it.

Biovail's stock did go down. It filed suit against Camelback and Cohen and more than a dozen others, and 60 Minutes did a segment on it.

Yesterday, the New York Post reported that one of the defendants, formerly an analyst with Banc of America Securities, had reached a settlement with Biovail. Biovail accused David Maris of issuing misleading research reports at the behest of SAC Capital, which was a client. According to the Post, Biovail agreed to pay $2 million for Maris' legal fees as part of the settlement.

The Post article went on to report that Biovail's lead attorney was thrown off the case for mishandling evidence, that another former Banc of America Securities analyst is suing Biovail for smearing him, and that the Securities and Exchange Commission is investigating Biovail's public statements as well as its accounting practices.

But according to a press release issued late yesterday by Biovail, it's all good.

The settlement with Maris, it says, "is expected to be extremely helpful in Biovail's pursuit of its lawsuit." Why? It includes "an agreement by Mr. Maris to provide substantial sworn testimony, voluntary production of material documents from BAS and Mr. Maris and the right to demand additional discovery of BAS and Mr. Maris which would include all relevant materials, such as e-mails, correspondence, tape recordings and trading records."

This settlement with Maris clears up other outstanding legal wranglings between Biovail and Banc of America Securities, which was never actually named in the suit. It turns out that Biovail had used some documents in the case that the bank provided for another lawsuit--this one filed by shareholders against Biovail--that is wasn't supposed to. And Banc of America asked the judge to throw out the case entirely.

So now, BofA gets off of Biovail's back about the mishandled evidence, and in return, the bank gets an alleged $2 million payment and its former analyst gets his named removed from the suit.

Confused? Understandable.

While the Biovail blame game continues, look no further than Biovail's stock chart for some answers. The stock is down 33 percent from the time it filed the lawsuit last year.

Turns out you'd have made some money if you'd shorted it.

by Megan Barnett