Bristol-Myers Settles With U.S.

Bristol-Myers (BMY Quote) settled a federal channel-stuffing probe Wednesday.

The company signed a so-called deferred prosecution agreement and agreed to pay $300 million into a shareholder fund. The news came as the feds indicted two former executives at the big drug company for their role in inflating the company's revenue and profit numbers between 1999 and 2001.

Former finance chief Frederick Schiff and and former executive vice president Richard Lane were indicted in Newark, N.J., on Wednesday, The Wall Street Journal reported. New York-based Bristol said it won't be indicted if it abides for two years by the terms of an agreement with the U.S. attorney's office in New Jersey.

"Rick Lane is innocent of these charges, he intends to fight them, and he will be fully vindicated at trial," Lane's lawyer said in a statement Wednesday.

As part of that pact, Bristol named a nonexecutive chairman, former American Express chief James Robinson. Robinson supplants James Dolan, who remains on as Bristol's CEO.

"The company is very pleased to have reached this resolution with the U.S. attorney," Dolan said. "We are determined that the mistakes of the past not be repeated and that the company's reputation for adhering to the highest standards of ethical business practices be fully restored."

The company said it would record an additional reserve of $249 million in the second quarter related to the shareholder fund payment.

Bristol said in 2003 that its accounting had been "inappropriate," with sales inflated by $2.5 billion, partly via quarter-end incentives to wholesalers. The company has already paid more than $500 million to settle related lawsuits and investigations, the Journal reported.

Bristol-Myers fell 27 cents Wednesday to $25.19.