The Securities and Exchange Commission filed civil fraud charges against two former officers of Bristol-Myers Squibb Co. for allegedly orchestrating a fraudulent earnings management scheme through channel stuffing.

The commission charged former Bristol-Myers chief financial officer Frederick S. Schiff, and the former president of the company's Worldwide Medicine Group, Richard J. Lane, with violations of the antifraud, reporting, books and records, and internal controls provisions of the federal securities laws in U.S. District Court for the District of New Jersey.

According to the SEC filing, under Schiff and Lane, Bristol-Myers sold excessive amounts of its pharmaceutical products to wholesalers ahead of demand and improperly recognized revenue from $1.5 billion of such sales to its two largest wholesalers. The SEC also said that it believes the company used "cookie jar" reserves to further inflate its earnings when it did not meet quarterly earnings targets.

In addition to facing fines, the SEC is seeking the return of any gains the two men made from the alleged misstatements, and seeks to prevent them from serving as officers or directors of publicly traded companies in the future. The SEC case also charges Schiff with lying to the company's auditors, PricewaterhouseCoopers LLP, in connection with PwC's audits of Bristol-Myers financial statements in 2000 and 2001. A year ago, Bristol-Myers settled with the SEC and agreed to pay $150 million and appoint an independent adviser to review and monitor its accounting practices, financial reporting and internal controls.

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