In the Matters of Valeant Pharmaceuticals International, Inc. n/k/a Bausch Health Companies Inc., J. Michael Pearson, Howard B. Schiller, and Tanya R. Carro, CPA

Admin. Proc. File Nos. 3-19899, 3-19900, 3-19901, 3-19902

On July 31, 2020, the Commission issued four separate but related Orders instituting and simultaneously settling administrative proceedings (the “Orders”) against Valeant Pharmaceuticals International, Inc., n/k/a Bausch Health Companies Inc., J. Michael Pearson, Howard B. Schiller, and Tanya R. Carro, CPA (collectively, the “Respondents”). In the Orders, the Commission found that beginning in 2014, when announcing certain GAAP and non-GAAP financial measures, Valeant among other things, misstated revenue transactions and included erroneous revenue allocations. For example, the Orders found that, for five consecutive quarters, the Respondents touted double-digit same store organic growth, a non-GAAP financial measure that represented growth rates for businesses owned for one year or more. Much of that growth came from sales to Philidor, a mail order pharmacy Valeant helped establish, fund, and subsidize. The Orders found that Valeant improperly recognized revenue relating to Philidor sales and did not disclose its unique relationship with or risks related to Philidor in its SEC filings and earnings and investor presentations. Valeant ended its ties to Philidor in October 2015 and restated its 2014 financial statements in April 2016, reducing the revenue that was improperly recognized. 

The Orders also found that Valeant failed to disclose the material impact of certain revenue it received from drug wholesalers following a 500% increase of the price of a single drug that Valeant acquired in April 2015. Valeant erroneously attributed the resulting revenue to more than 100 unrelated products and did not record any as attributable to that drug. Additionally, in its SEC filings and earnings presentations for the second and third quarters of 2015 and its 2015 year-end report, Valeant failed to disclose the impact of that allocation on its GAAP and non-GAAP financial measures.

The Commission ordered Respondents to pay civil penalties for a collective total $45,425,000. In each of the Orders, the Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties collected can be distributed to harmed investors. See the Commission’s Orders: Release Nos. 33-10809, 33-10810, 33-10811, 33-10812. 

On January 8, 2024, the Commission issued an Order consolidating the Fair Funds in each of the Orders for purposes of distribution administration. See the Commission’s Order: Release No. 34-99284.

On February 5, 2024, the Commission issued an Order appointing Miller Kaplan Arase LLP as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-99468.

On February 12, 2024 the Commission issued an Order appointing KCC Class Action Services, LLC as the Fund Administrator to oversee the administration and distribution of the Fair Fund and set the administrator’s bond amount. See the Commission’s Order: Release No. 34-99516.

On June 24, 2024 the Commission published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). The notice provides the public with 30 days to submit their comments on the Proposed Plan. See the Commission’s Notice: Release No. 34-100410 and the Proposed Plan. 
 
The Proposed Plan provides that the distribution of the Fair Fund shall be made to those injured investors who were harmed by the Respondents’ conduct described in the Orders, in connection with improper revenue recognition and materially misleading disclosures as calculated by the methodology used in the Plan of Allocation in the Plan.

On August 22, 2024, the Commission issued an order approving the plan of distribution and published the approved plan of distribution (“Plan”) See the Commission’s Order: Release No.  34-100808  and the Plan

For more information, please contact the Fund Administrator:
Email: info@valeantfairfund.com
Telephone number: 1-888-890-6712
Website domain: https://www.valeantfairfund.com/