|  | | 2007 News and Press Releases | | |
SETTLEMENT NEWS:
Cardinal Health Settles With SEC For $35 Million
Staff Writer
Securities Law 360. July 26, 2007
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EXCERPT: Two months after agreeing to settle shareholder suits over its alleged securities violations for $600 million, Cardinal Health Inc. will be footing an additional $35 million payout to the U.S. Securities and Exchange Commission. The SEC said that Cardinal Health engaged in a scheme to overstate its operating revenue and earnings from September 2000 through March 2004. The scheme allowed Cardinal to present a false picture of its operating results to the financial community and the investing public. Cardinal managed its reported earnings by selectively accelerating the payment of vendor invoices in order to prematurely record income, improperly classifying $22 million of expected litigation settlement proceeds to increase operating earnings, improperly classifying over $5 billion of bulk sales as operating revenue, and improperly adjusting its reserve accounts. These, and other improper practices, caused the company to misstate earnings by more than $65 million. The SEC began informally investigating the company in October 2003. That probe turned into a formal investigation in 2004, prompting Cardinal Health to launch an internal review. Later that year, after the audit committee inspected the company, Cardinal revised its fiscal 2004 and earlier financial statements. |
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