SEC Investigates Bristol-MyersAug 29, 2002 | AP
The Securities and Exchange Commission probe into whether Bristol-Myers Squibb Co. improperly inflated its revenues last year by up to $1 billion has become a formal investigation, the company said Thursday.
The SEC declined to comment directly on the case but a spokesman said that a formal investigation means the staff has found enough evidence to show that laws may have been violated. An investigation also gives the staff members working on the case the power to issue subpoenas.
Last month, Bristol-Myers acknowledged that in April the SEC began examining whether its sales incentives to wholesalers in 2001 inflated revenues so that the company would meet earnings projections. The inventory glut caused by those incentives will slash the company's earnings by up to 50 percent this year.
Bristol-Myers had said there always was a possibility that the probe would evolve into an investigation. In a statement, the pharmaceutical giant said it still believes its accounting treatment for the inventory was appropriate and will continue to cooperate with the SEC.
However, Bristol-Myers spokeswoman Tracy Furey declined to comment on whether the company had received any subpoenas or whether any of its executives had agreed to be deposed by SEC officials.
"Since this is an ongoing investigation, it would not be appropriate," Furey said.
Bristol-Myers stock fell 77 cents, or 3 percent, to $24.29 a share on the New York Stock Exchange.
Over the past year, the company's pipeline has failed to produce new blockbusters while several of its key drugs have lost patent protection. It agreed to invest up to $2 billion in ImClone Systems Inc., but has had to write off $732 million of that because the biotech company's stock imploded because of regulatory problems.