Washington D.C., October 1, 2018 - On September 28, 2018, the Securities and Exchange Commission charged Salix Pharmaceuticals, Ltd. and its former CFO with repeatedly misleading analysts and investors about the company's future prospects. The former CFO, Adam Derbyshire, will pay more than $1 million to settle the charges.

According to the SEC's complaints filed in U.S. District Court for the Southern District of New York, Salix and Derbyshire made false statements to analysts and investors during quarterly earnings calls by significantly understating the amount of Salix drugs that wholesaler customers held in inventory. Salix had engaged in a long-standing practice of flooding the distribution channel by using incentives to induce customers to purchase more products, creating a short-term revenue bump but excess supply that imperiled future sales. The complaints allege that Salix and Derbyshire also failed to disclose in SEC reports that the practice had impacted earnings and presented a significant risk to Salix investors. Salix is now a subsidiary of Bausch Health Companies Inc., which was previously known as Valeant Pharmaceuticals International, Inc. The alleged misconduct occurred prior to Salix's acquisition by Valeant.

To settle the charges, Salix, without admitting or denying the Commission's allegations, agreed to be enjoined from future violations of Section 17(a)(2) of the Securities Act of 1933, Sections 10(b) and 13(a) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b-5(b) and 13a-13. The SEC's settlement with Salix reflects the company's self-report to the Commission and its significant cooperation with the investigation. The proposed settlement is subject to district court approval.

Without admitting or denying the allegations in the Commission's complaint, Derbyshire agreed to a permanent injunction against violations of Section 17(a)(2) of the Securities Act, Section 10(b) of the Exchange Act, and Exchange Act Rule 10b-5(b), and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rule 13a-13 thereunder. He also agreed to pay $558,534 in disgorgement and interest, plus a penalty of $494,836, and to be barred for five years from serving as an officer or director of a public company. The proposed settlement is subject to district court approval. Derbyshire separately agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC's order would permit Derbyshire to apply for reinstatement after five years.

The SEC's investigation was conducted by Michelle Bougdanos and Nicholas Margida, with assistance from James Smith, Christian Schultz, and Matthew Scarlato. The case was supervised by David Frohlich.