U.S. Securities and Exchange Commission
Litigation Release No. 17861 / November 25, 2002
Securities and Exchange Commission v. ICN Pharmaceuticals, Inc., Milan Panic, Nils O. Johannesson and David C. Watt, Civil Action No. 99-1016DOC (ANx) (C.D. Cal.)
ICN Pharmaceuticals and Former CEO Milan Panic Settle SEC Charges; ICN to Pay $1 Million and Panic to Pay $500,000 in Civil Penalties
The Securities and Exchange Commission ("Commission") announced today that it has settled its pending injunctive action against defendants ICN Pharmaceuticals, Inc. ("ICN"), a southern California-based manufacturer and distributor of pharmaceutical products; Milan Panic ("Panic"), ICN's former chief executive officer and chairman of the board; Nils O. Johannesson, a former Executive Vice President of Research and Development at ICN; and David C. Watt ("Watt"), ICN's former General Counsel.
ICN consented, without admitting or denying the allegations, to the entry of a Final Judgment and Order permanently enjoining it from future violations of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder; requiring ICN to comply with detailed corporate governance and disclosure related undertakings for a period of five years; and ordering ICN to pay $1 million in civil penalties. The Order provides that ICN may apply for early termination of the undertakings after a period of eighteen months upon a showing that the interests of public investors no longer require the continued imposition of the undertakings.
Panic consented, without admitting or denying the allegations, to the entry of a Final Judgment and Order permanently enjoining him from violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; requiring him to comply with undertakings for a period of five years; and ordering him to pay $500,000 in civil penalties. The Commission is dismissing the claims pending against defendants Johannesson and Watt in the civil injunctive action.
The Commission filed its civil complaint in this matter on August 11, 1999. The complaint alleged that, between December 5, 1994 and February 17, 1995, the defendants made misleading public statements concerning the status of ICN's 1994 new drug application, then pending before the U.S. Food and Drug Administration ("FDA"). The new drug application sought approval of ICN's drug, ribavirin, as a stand alone treatment for chronic hepatitis C. The Commission's complaint alleged that ICN's December 5, 1994 press release misled the public concerning the status of ICN's 1994 new drug application and that the company did not disclose the FDA's rejection of the application until February 17, 1995. Following the February 17 press release, the price of ICN's stock dropped approximately 34% or $7.25 per share from $22.63 to $15.38, over two days of trading. In December 2001, ICN pled guilty to a single count of criminal securities fraud in connection with one of the events alleged in the Commission's civil complaint. In connection with that matter, ICN paid $5.6 million in criminal fines.
The Commission also announced today that it simultaneously instituted and settled two cease-and-desist proceedings against Johannesson and Watt, respectively. Johannesson and Watt each consented to the entry of an Order, pursuant to Section 21C of the Exchange Act, finding that he was a cause of ICN's misleading disclosure in its December 5, 1994 press release and ordering that he cease and desist from committing or causing any violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. See Securities Exchange Act Release No. 34-46900 (Johannesson) and Securities Exchange Act Release No. 34-46899 (Watt).