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SEC Prosecutions

SEC Prosecutions

Bristol-Myers Squibb Agrees to Pay $150 Million to Settle Charges of Fraudulent Earnings Management

SEC v. Bristol-Myers Squibb Company

  • 2004
  • $150 million

Defendant allegedly perpetrated a fraudulent earnings management scheme by, among other things, “channel stuffing,” i.e., selling excessive amounts of pharmaceutical products to its wholesalers ahead of demand, and improperly recognizing revenue from $1.5 billion of such sales to its two largest wholesalers. The company also allegedly used “cookie jar” reserves to meet its internal sales and earnings targets and analysts’ earnings estimates. In addition to severe monetary sanctions, the settlement required numerous remedial undertakings, including the appointment of an independent adviser to review and monitor defendant’s accounting practices, financial reporting and internal controls.

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