SEC Enforcement Action Final Judgment Entered Against Bristol-Myers Squibb Company

SEC NEWS DIGEST
Issue 2004-152 August 9, 2004

The Commission today announced that the Honorable Faith S. Hochberg,
U.S. District Court Judge for the District of New Jersey has entered a
Final Judgment order (Order) against defendant Bristol-Myers Squibb
Company in a civil action that the Commission filed on Aug. 4, 2004,
against the New York-based pharmaceutical company. The Order requires
Bristol-Myers to pay $150 million 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 sales associated with the channel-stuffing in violation of
generally accepted accounting principles. 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. Bristol-Myers consented to the entry of the Order without
admitting or denying the allegations in the Commission's Complaint and
agreed to the following relief: (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. The Commission's investigation is continuing. [SEC
v. Bristol-Myers Squibb Company, Civil Action No. 04-3680 (D.N.J.)
(Hochberg, J.)] (LR-18822)