March 31, 2012
Former Bristol Myers CFO Settles SEC's "Channel-Stuffing" Charges
On March 27, 2012, a federal district court in New Jersey entered final judgments against Frederick S. Schiff, former CFO of Bristol-Myers Squibb Co. (Bristol Myers) and Richard J. Lane, former President of the Worldwide Medicines Group for Bristol Myers. According to the Commission’s complaint, for the period January 1, 2000 through December 31, 2001, Schiff and Lane deceived the investing public about the true performance, profitability and growth trends of Bristol Myers and at their direction, Bristol Myers engaged in a “channel-stuffing” scheme. The complaint alleged that Bristol Myers used financial incentives to induce wholesalers to buy its pharmaceutical products in excess of prescription demand in order to artificially inflate its results, which in turn was necessary in order to meet Bristol Myers’ internal earnings targets and the consensus earnings estimates of Wall Street securities analysts.
Schiff and Lane consented to the entry of the final judgments without admitting or denying the allegations of the Commission’s complaint. Schiff is required to pay disgorgement plus prejudgment interest totaling $130,992, and is barred from serving as an officer or director of a public company for one year. Lane is required to pay disgorgement plus prejudgment interest totaling $36,750, and is barred from serving as an officer or director of a public company for one year.
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