Bristol-Myers Squibb Company ("BMS" or the Company) discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products globally.
In 2000, a class action was filed against BMS in the US District Court for the District of New Jersey. Specifically, the original Complaint alleges that Defendants violated the federal securities laws by making itself, and allowing its drug development partner to make, without correction, materially false and misleading statements about the progress of its Erbitux cancer treatment drug's application for FDA approval even as BMS knew that the application and data were false. Specifically, the Complaint alleges that on December 28, 2001, a press release disclosed that the FDA had rejected the filing of a Biologics License Application for Erbitux. On January 4, 2002, The Cancer Letter reported that the FDA repeatedly informed Defendants about problems with the Erbitux clinical trials during the Class Period. These shocking revelations caused the stock to plummet from a Class Period high of $56 to $40 by March of 2002.
The Class Members were allegedly damaged by the artificial inflation of BMS's stock price due to the Defendants' materially false and misleading statements and omissions regarding the Company's financial condition and the prospect for the U.S. Food and Drug Administration's approval of the drug Erbitux, in which BMS invested $2 billion for the drug's development.
According to the docket for this 2002 case, on October 7, 2002, the Court issued a Stipulation and Order granting the motion to transfer claims and the Complaints containing only Vanlev claims to the USDC for the District of New Jersey. All non-Vanlev cases and all non-Vanlev claims, including all such claims alleged in the Complaint in the actions pending in the USDC for Southern District of New York were ordered to remain in the Southern District of New York.
On April 2, 2004, the Court entered the Order granting the motion to dismiss the action. The Plaintiffs soon after filed a Notice of Appeal. On July 30, 2004, the Second Circuit Court of Appeals issued a Mandate remanding the action to the District Court for purposes of settlement, and on August 4, 2004, a Stipulation and Order of Settlement was filed.
In a press release dated July 30, 2004, the lead Plaintiffs in this case announced that the court has granted preliminary approval of a settlement reached in the securities class action litigation. BMS has agreed to pay $300 million to the Class Members. The settlement resolves all of the Class Members' claims against the Company and the individual Defendants. BMS said in a statement that the Company had agreed to a separate settlement of $150 million with the Securities and Exchange Commission without admitting or denying any liability, and Company executives would not comment on any other investigations into its accounting practices or the future steps it might take.
In a press release dated June 5, 2005, pharmaceutical company BMS is expected to settle a federal probe of its past accounting practices for $300 million, according to published reports. As part of the so-called "deferred prosecution" agreement, the New York-based Company would be able to avoid criminal charges if it complies with certain terms of the settlement, The New York Times and The Wall Street Journal both reported on their websites, citing unnamed sources familiar with the settlement talks. An announcement of the agreement could come this week, the reports said. Among the terms of the deal with the Justice Department are expected to be the separation of the chairman and chief executive titles currently held by Peter R. Dolan, and other changes in the Company's corporate governance practices, according to the Journal. No current BMS executives are expected to be indicted, thought it's possible former executives may be indicted, according to the Journal.
According to a press release dated June 8, 2006, the Securities and Exchange Commission announced that $750 million will be distributed to compensate shareholders injured by fraudulent earnings management at BMS. The distribution fund includes $150 million BMS paid to settle fraud charges brought by the Commission. The fund also includes $300 million BMS paid to settle a related civil class action, and $300 million paid by BMS in a deferred prosecution agreement with the U.S. Attorney's Office in New Jersey to address the Company's criminal liability. Recent orders entered by federal courts in New Jersey and New York allowed for the coordinated distribution. On Aug. 4, 2004, without admitting or denying the allegations in the Commission's Complaint, BMS consented to be permanently enjoined from violating certain provisions of the federal securities laws. The Company also agreed to remedial measures and to pay $150 million to compensate investors. By distributing the money under a single distribution plan, administrative costs are substantially reduced.
