"SEC fines CVS Caremark $20m for overstating earnings; Settles federal allegations that it misled investors in $1.5b bond offering in 2009" by Beth Healy | Globe Staff April 09, 2014
Drugstore giant CVS Caremark Corp. has agreed to pay $20 million to settle charges brought by federal securities regulators that it misled investors in 2009 and committed accounting violations.
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According to the SEC’s complaint, filed in federal court in Rhode Island, CVS fraudulently omitted from a $1.5 billion bond offering document in 2009 that it had recently lost significant Medicare Part D and contract revenues in its pharmacy benefits business. When CVS eventually revealed the full extent of the setbacks on Nov. 5, 2009, its stock price fell 20 percent in a day, the SEC said.
Meaning stock prices are based on fraud, and thus the fortunes of the elite.
In addition, the SEC alleged that in the third quarter of 2009, CVS “dramatically and without public disclosure’’ changed its accounting for 525 Longs drugstores it had acquired the prior year.
By reducing the value of property in the Longs stores from $189 million to zero, CVS was able to post a small gain in earnings for the quarter, instead of a drop, according to the complaint, filed in federal court. CVS is based in Woonsocket, R.I.
CVS neither admitted nor denied the SEC’s charges. “This matter is now fully resolved for the company and individuals,’’ CVS said in a statement Tuesday. The company said it had already announced the pending settlement to shareholders, last August, and that the final resolution would not require a restatement of earnings.
Meaning despite all the hot air from the administration and Washington, nothing has changed down on Wall Street.
The controller who oversaw the earnings overstatement was Laird Daniels, 44, of North Attleborough, the SEC said. Daniels, according to the SEC, said the accounting scheme turned the acquisition of the Longs drugstores from a “bad guy” into a “good guy.”
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