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ICN Settles SEC Lawsuit for $1 Million

Nov 25, 2002 | AP

ICN Pharmaceuticals Inc. will pay $1 million to settle a Securities and Exchange Commission lawsuit claiming the company made misleading statements about a drug application that was pending in the mid-1990s, the SEC and ICN said Monday.

ICN consented to the settlement without admitting or denying the alleged violations of securities laws. In a separate settlement, ICN's former chief executive and chairman, Milan Panic, has agreed to pay $500,000 in civil penalties under similar terms.

The SEC said it will dismiss claims pending against two other defendants, Nils O. Johannesson, a former executive vice president of research and development, and David C. Watt, ICN's former general counsel.

The civil complaint filed by the SEC in 1999 claimed the defendants made misleading public statements about ICN's application to the Food and Drug Administration for approval of the drug ribavirin as a treatment for chronic hepatitis C.

The complaint alleged that a Dec. 5, 1994, press release from ICN misled the public about the status of the new drug application and that the company did not disclose the FDA's rejection of the application until Feb. 17, 1995.

After the rejection became public, the price of ICN's stock dropped approximately 34 percent, or $7.25 a share, from $22.63 to $15.38 over two days of trading, the SEC said.

In December 2001, ICN pleaded guilty to a single count of criminal securities fraud in connection with one of the events alleged in the SEC's civil complaint and paid $5.6 million in criminal fines, the commission said.

The SEC also said Johannesson and Watt each consented to a finding of being the cause of the misleading disclosure in the Dec. 5, 1994, press release.

ICN said that under the settlement it agreed to comply with detailed corporate governance and disclosure-related undertakings for five years, but will be able to apply for early termination after 18 months. The $1 million penalty was already reserved, it said.

"We are pleased to put this action behind us," said Robert W. O'Leary, ICN's chairman and chief executive.

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