Bristol-Myers Paying $300 Million in Class Action
Bristol-Myers Squibb (BMY) agreed to pay $300 million to settle a shareholder class-action suit.
The New York-based company didn't admit wrongdoing in settling the suit, which was pending in the U.S. District Court in the Southern District of New York. The suit concerned Bristol-Myers' handling of wholesaler inventory and its relationship with biotech ImClone Systems (IMCL).
In September 2001, Bristol-Myers sank $2 billion into ImClone for marketing rights to the then-experimental colon cancer drug Erbitux. The Food and Drug Administration's decision in December 2001 to reject the Erbitux marketing application because it was incomplete led to big share price declines at both companies.
The accounting issue involved a restatement Bristol-Myers announced more than a year ago. The company had overstated revenue between 1999 and 2001 by $2.5 billion by offering wholesalers incentives to build up their inventories -- a maneuver known as channel stuffing.The company said the cost of the settlement will be charged to a reserves account it increased last quarter. The proposed settlement does not resolve the pending governmental investigations and other private litigation (both ERISA and derivative litigation) related to wholesaler inventory issues and other accounting matters. On Friday, Bristol-Myers slipped 2 cents to $22.55.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV