Legal issues will affect the stock price of Valeant (NYSE:VRX) going forward, but what direction will they take it? Due to Valeant's liquidity challenges and lack of cash set aside to handle potential settlements, the impact could be severe.According to Wells Fargo's David Maris, Valeant is currently facing 12 government and regulatory investigations, including an SEC investigation, Department of Justice investigations, and multiple states' Attorney's Generals investigations, as well as 3 Shareholders class actions, 10 U.S. securities litigation (with investment groups including Janus, T. Rowe Price, and others), 8 Canadian securities class actions, 3 RICO suits, an IRS review, and an insider trading case, among others.However, the outlook, while negative, is more nuanced than Maris presents. Some of these cases may not actually hurt Valeant. The stock has responded positively to a legal development with unclear implications for the company, and this recent movement may be unjustified. VRX Price data by YChartsPhilidor 'Kickback Scheme'In November of 2016, two former Valeant and Philidor Executives, Gary Tanner and Andrew Davenport were indicted in an alleged kickback scheme. Allegedly, Valeant's Tanner agreed to misrepresent Phillidor's business to Valeant (so Valeant would agree to a $100 purchase option) in return for a $10 million dollar kickback. He is alleged to have repeatedly lied about his financial interest in the transaction. The announcement of this case in November hurt Valeant shares immensely. But upon closer inspection, it became apparent that Valeant was the victim here. Tanner allegedly lied to Valeant, and this is supported by Valeant's press release on the issue: Gary Tanner ceased to be a Valeant employee on September 13, 2015, and Andrew Davenport has never been an employee of the Company. The counts issued today include allegations that the charged parties engaged in actions to defraud Valeant as a company.It seems like the former employees are held personally responsible for their behavior, and Valeant may not be liable for any damages. Why then, did Valeant react negatively to the indictment, and now positively to this recent announcement that the executives have denied guilt in the scheme? This looks like an irrational market reaction due to a misunderstanding of Valeant's role in this case.ConclusionWhile Valeant has numerous legal troubles that will pressure the stock price, this recent development in the Davenport and Tanner indictment, should not move Valeant stock in either direction, and so the recent rally in the stock represents an unsubstantiated movement that may not stick long-term.