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.
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