Thursday, September 29, 2011

Medicis, its auditor will pay $18 mil to settle suit

Medicis said in a filing in June that its share of the proposed settlement would be paid entirely by its insurers. The company admits no wrongdoing as part of the settlement.

The shareholders' lawsuit stems from Medicis' announcement in September 2008 that it would restate earnings from 2003 through the first half of 2008.

Shareholders alleged that Medicis offered its wholesale customers generous return policies for prescription drugs as part of an effort to inflate the company's revenue. Medicis would accept returned products that were expired or about to expire at either no cost or substantial discounts to the wholesale customers, according to the lawsuit.

When Medicis disclosed that it would need to restate nearly six years worth of earnings statements, the company's share price dropped $2.34, or 13 percent, in one day of trading, erasing about $125 million in shareholder equity.

In addition to Medicis and Ernst & Young, the lawsuit names Medicis CEO Jonah Shacknai, Chief Financial Officer Richard Peterson and President Mark Prygocki as defendants.

Posted via email from Jack's posterous

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