The parties have reached a $50 million settlement in an administrative action filed against pharmaceutical company Bristol-Myers Squibb Company (NYSE:BMY) filed by the U.S. Securities and Exchange Commission. The action alleged that, from the first quarter of 2000 through the fourth quarter of 2001, Bristol-Myers engaged in a fraudulent scheme to overstate its sales and earnings in order to create the false appearance that the company had met or exceeded financial projections set by its officers and earnings estimates established by Wall Street securities analysts. Persons who purchased, sold, or held Bristol-Myers stock during that period may contact the attorneys who prosecuted the case for more information.

The lawsuit alleged that Bristol-Myers inflated its results primarily by stuffing its distribution channels with excess inventory near the end of every quarter, in amounts sufficient to meet sales and earnings targets set by officers. This channel-stuffing led to the company improperly recognizing about $1.5 billion in revenue from consignment-like sales in violation of generally accepted accounting principles. When Bristol-Myers' results fell short of the Wall Street analysts' earnings estimates, the company used improper accounting, including "cookie jar" reserves, to further inflate its earnings. At no time during 2000 or 2001, did Bristol-Myers disclose that: (1) it was artificially inflating its results through channel-stuffing; (2) channel-stuffing was contributing to a buildup in wholesaler inventory levels; (3) the buildup in wholesaler inventory posed a risk to Bristol-Myers' future sales and earnings; or (4) the company was using improper accounting, including "cookie jar" reserves, to further inflate its results. In March 2003, Bristol-Myers restated its prior financial statements and disclosed its channel-stuffing activities and improper accounting.

Simultaneous with the filing of the lawsuit, Bristol-Myers consented to the following relief:

• a permanent injunction against future violations of certain antifraud, reporting, books and records and internal controls provisions of the federal securities laws.

• monetary remedies including a civil penalty of $100 million plus a $50 million shareholder fund.

• various remedial undertakings, 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.