BUSINESS

Valeant CEO Michael Pearson Returns As Company Faces U.S. SEC Probe

02/29/2016 12:25 EST | Updated 03/01/2017 05:12 EST

MONTREAL - Valeant Pharmaceuticals said Monday it is under investigation by the U.S. Securities and Exchange Commission in a previously undisclosed probe.

In a brief statement, the Quebec-based drugmaker confirmed it received a subpoena from the commission in the fourth quarter of 2015. The company said it would have disclosed the investigation when filing audited full-year results, but those have been delayed.

Valeant declined further comment. The commission also declined comment.

The news came as shares in the company plummeted to $94.49 on the Toronto Stock Exchange, a drop of $15.34 or nearly 14 per cent. At its peak last summer, the stock was trading above $346.

The announcement Monday is the latest setback for Valeant. The company has been under scrutiny for months amid allegations of drug price gouging, accusations it has denied, and concerns about a previously undisclosed relationship with a U.S. mail-order pharmacy _ an affiliation it later severed.

It is one of several companies under investigation as the U.S. Congress looks at price increases for certain specialty drugs.

The company's fourth-quarter financial report was due to be released earlier Monday. But the return this past weekend of CEO Michael Pearson from medical leave delayed the release of the report.

Pearson, who had been off the job since mid-December due to pneumonia and complications from the treatment, said in a statement Sunday that his ``immediate priority'' is to rebuild relationships with business partners, regulators and government representatives.

"I realize that recent events are disappointing to everyone and it is my responsibility to set the appropriate tone for the organization,'' Pearson said in the statement.

"I will focus on the retention and enhancement of our management teams and employee groups around the world and ensure that we maintain a culture that adheres to the highest ethical standards.''

Valeant also withdrew previously announced estimates of what it expects to achieve in the 2015 fourth quarter ended Dec. 31 and for the 2016 financial year.

The company announced last week that its audited results for 2015 would be delayed because it had to restate its financial reports for 2014 and 2015 due to errors in the way it recorded revenue from sales through Philidor, the Pennsylvania mail-order pharmacy with whom it was once affiliated until their business relationship ended in October.

Valeant didn't announce a new date for its financial report but said it would be "in the near term.''

Company shares dropped $7.80, or 9.7 per cent, to $72.81 in late-afternoon trading Monday.

- with files from The Associated Press

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