As Dealbook reports, a New Jersey judge threw out a lawsuit filed by Canadian drugmaker Biovail Corp. against a hedge fund, debunking once and for all the premise of a three-year-old 60 Minutes story.

As we said last year, the piece, reported by Lesley Stahl, sought to cast Biovail as the victim of a scheme engineered by hedge fund SAC Capital and independent stock-research firms to profit from a disinformation campaign to drive down the company’s stock.

The problem with the premise was that long before 60 Minutes began its piece, Biovail had already disclosed it was under investigation by the Securities and Exchange Commission for securities fraud. Not only did this fact make Biovail a problematic victim in any securities-fraud story, it made it much more likely the Biovail case would demonstrate not the danger of short sellers, but their value in calling attention to frauds in the market.

Compounding the journalistic fault, as we’ve noted, was a bit of rhetorical sleight-of-hand in the 60 Minutes piece that showed the news organization knew of the SEC’s investigation of Biovail, but buried the critical fact—see if you can follow this—in the denial of SAC that it had done anything wrong:

The hedge fund SAC denies all the charges in Biovail’s lawsuit and says that the decline in the company’s stock was due to earnings shortfalls and investigations by authorities, including the Securities and Exchange Commission, “not any conspiracy.”

The SEC lawsuit against Biovail—not SAC or the research firms—two years after the story aired was the first blow, and it was basically fatal. Biovail’s settlement was the second.

Last February, Judge Stanley R. Chesler of the United States District Court for the District of New Jersey threw out the federal version of Biovail’s lawsuit against SAC, delivering the third blow. Yesterday’s state court dismissal of Biovail’s suit was pounding the rubble.

(Updated, 11:50 a.m.: I neglected to mention that in May 2008, a Biovail unit also agreed to plead guilty to a criminal charge brought by the Justice Department of making illegal payments in 2003 to induce the purchase a blood-pressure drug, Cardizem LA. If the goal was to find a corporate victim, Biovail was truly an unfortunate choice.)

As our regular readers know, we’re very pro-investigation here at The Audit, and in fact we think there aren’t nearly enough of them.

And mistakes happen.

But investigations need time, resources, patience, and, when important facts undermine a story’s premise, the discipline on the part of senior editorial leaders to recast the story or pull the plug.

Dean Starkman writes and edits The Audit. He is CJR's Kingsford Capital Fellow.