A federal judge has approved a $165 million settlement by Schering-Plough Corp, a drugmaker now owned by Merck & Co (MRK.N), to resolve investor class-action lawsuits over alleged fraudulent statements regarding the allergy medicine Clarinex.

U.S. District Judge Katharine Hayden in Newark, New Jersey gave final approval on Dec. 31 to the accord, which may affect more than 280,000 investors in the nearly nine-year-old case.

Investors sued Schering after the company on Feb. 15, 2001 said the U.S. Food and Drug Administration had withheld approval for Clarinex, citing deficiencies in manufacturing facilities in New Jersey and Puerto Rico. Schering also issued a lower-than-expected earnings forecast.

Shares of Schering fell about 15 percent the following day, prompting lawsuits that the company failed to properly disclose the deficiencies sooner, court records show.

"The settlement is reasonable and fair," Hayden wrote. "While Schering-Plough arguably could pay more, pushing for more in the face of risks and delay would not be in the interests of the class."

Hayden said the settlement resulted from several mediation sessions that began in June 2008. She said it is one of the five largest securities class-action settlements in New Jersey federal court.

The lead plaintiff in the case is the Florida State Board of Administration. Hayden agreed to an award of $37.95 million in legal fees to its law firm, Barrack, Rodos & Bacine.

Merck is based in Whitehouse Station, New Jersey. It bought Schering in November.

The case is In re Schering-Plough Corp Securities Litigation, U.S. District Court, District of New Jersey, No. 01-829.