SEC Enforcement Action Bristol-Myers Squibb Co. Agrees to Pay $150 Million to Settle Civil Fraud Action

SEC NEWS DIGEST
Issue 2004-149 August 4, 2004

The Commission today announced that Bristol-Myers has agreed to pay $150
million to settle a civil action that the Commission has filed against
the New York-based pharmaceutical company for perpetrating a fraud
scheme to overstate its results from the first quarter of 2000 through
the fourth quarter of 2001. Bristol-Myers overstated its results
primarily by: (1) engaging in channel-stuffing near the end of every
quarter in amounts sufficient to meet sales and earnings targets set by
officers (channel-stuffing); and (2) improperly recognizing about $1.5
billion in revenue from consignment-like sales associated with the
channel-stuffing contrary to generally accepted accounting principles
(GAAP). When Bristol-Myers' results fell short of Wall Street analysts'
earnings estimates, the Company used improper accounting, including
"cookie jar" reserves, to further inflate its earnings. Simultaneous
with the filing of the civil action, Bristol-Myers agreed to the
following relief without admitting or denying the allegations in the
Commission's Complaint, except as to jurisdiction, which is admitted:
(1) a permanent injunction against future violations of certain
antifraud, reporting, books and records and internal controls provisions
of the federal securities laws; (2) monetary relief for the benefit of
shareholders, including a civil penalty of $100 million plus a $50
million shareholder fund; and (3) various remedial measures, including
the appointment of an independent advisor to review Bristol-Myers'
accounting practices and internal control systems and periodically
assess the status of remedial actions undertaken or planned by the
Company in those and other areas, such as financial reporting. [SEC v.
Bristol-Myers Squibb Company, Civil Action No. 04-3680 (D.N.J.)
(Hochberg, J.)] (LR-18820; Press Rel. 2004-105)