CVS Caremark has agreed to pay $20 million to settle charges from the Securities and Exchange Commission that the drug store giant misled investors about significant financial setbacks and used improper accounting that artificially boosted its financial performance.
According to the SEC’s complaint, which was filed in federal court in Rhode Island, CVS has two business segments as a pharmacy benefits manager and a retail chain of drug stores. In offering documents for a $1.5 billion bond offering in 2009, CVS fraudulently omitted that it had recently lost significant Medicare Part D and contract revenues in the pharmacy benefits segment. Investors were therefore misled about the expected future financial results for that line of business.
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