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It's been a scary Halloween for shareholders of Valeant Pharmaceuticals (VRX) . Shares of the beleaguered Canadian drug maker sank more than 12% Monday on news that federal prosecutors are focusing on its former CEO and chief financial officer as part of an investigation into possible accounting fraud. 

Bloomberg News cited unnamed sources as saying the FBI and federal prosecutors in Manhattan are scrutinizing former Valeant CEO Michael Pearson and ex-CFO Howard Schiller, and the charges could come "within weeks."

Valeant responded in a statement: "We do not comment on rumors about investigations and cannot comment on or speculate about the possible course of any ongoing investigation." Bloomberg said Pearson's lawyer also declined to comment, while Schiller's attorney didn't immediately respond to a request for comment.

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The news broke less than hour before markets closed, sending VRX into a tailspin. Valeant had been flat most of the day, but ultimately ended the session down 12.31% at $17.84. However, in late trading shares are up 1.1%.

Monday's decline came on the heels of an 8% Valeant stock drop on Friday. Pharmaceuticals fell more or less across the board on Friday after San Francisco-based drug distributor McKesson (MCK) - Get Report said on an earnings call that regulatory pressures had prompted one unnamed competitor to cut prices "significantly."

All told, Valeant shares are down about 82% so far this year amid controversy surrounding alleged accounting problems and steep price hikes on products the firm acquired during years of debt-fueled acquisitions. The scandals led to Pearson and Schiller's departure from Valeant, which is a member of our "Stressed Out" list of stocks that face big debt pressures.

VRX has previously admitted to roughly $58 million of improperly booked sales tied to its former partnership with mail-order pharmacy Philidor. Last fall, reports of alleged accounting misconduct involving Philidor ignited congressional and U.S. Securities and Exchange Commission investigations and led to a delay in Valeant's annual and first-quarter SEC filings. Those delays, in turn, put Valeant in apparent violation of its bond indentures and loan covenants, prompting a fight with creditors who hold Valeant's $31 billion of debt.

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