Valeant shares slump on new SEC investigation

Shares in embattled drugmaker Valeant Pharmaceuticals International fell up to 21 per cent as it said it was under investigation by the US Securities and Exchange Commission in a previously undisclosed probe.

The SEC probe is separate from an existing investigation into a company purchased by Valeant last year, Salix Pharmaceuticals. matter. The Salix probe was disclosed previously.

The person declined to comment on the record because the matter isn’t yet public. It’s unclear what the new probe is centred around.

“Valeant confirms that it has several ongoing investigations, including investigations by the US attorney’s offices for Massachusetts and the Southern District of New York, the SEC, and Congress,” said Laurie Little, a Valeant spokeswoman.

The stock fell 18 per cent to $65.80 at the close in New York.

Judy Burns, an SEC spokeswoman, declined to comment on the new probe.

This comes a day after the company cancelled the release of fourth-quarter earnings, withdrew 2016 financial guidance and said its chief executive had returned from medical leave.

The timing of the return of chief executive Mike Pearson had been unknown after suffering from severe pneumonia, and there was speculation on Wall Street on whether he would return at all.

The full outcome of its board investigation into the relationship with pharmacy Philidor RX Services, now terminated, is still unknown.

Last week, the company said it would restate earnings to reflect preliminary findings from the board review, adding that it should have accounted for $58 million of revenue later than it did.

The company also said it would delay filing its quarterly results, and had set Monday for releasing unaudited results to Wall Street. A conference call to discuss quarterly earnings was also cancelled.

On Sunday night, the company cancelled the Monday presentation and said its chief executive had returned from a two-month medical leave.

Moody’s placed the ratings of Valeant under review for downgrade, reflecting concerns that the company’s operating performance is weaker than its expectations. – Reuters/Bloomberg