Biovail management also intentionally deceived the company's outside auditors as to the true nature of the transactions. The Commission's complaint alleges that each of Biovail's fraudulent accounting schemes had a material effect on Biovail's financial statements for the relevant quarters and years and was engineered by Biovail's senior management in order to inflate Biovail's reported earnings. Biovail intentionally misstated foreign exchange losses that caused its second quarter 2003 loss to be understated by about $3.9 million.Biovail concocted a fictitious bill and hold transaction to record approximately $8 million in revenue in the second quarter of 2003.

Biovail, over several reporting periods in 20, improperly moved off its financial statements and onto the financial statements of a special purpose entity approximately $47 million in expenses incurred in the research and development of some of Biovail's products.The Commission's complaint also alleges three accounting schemes that affected reporting periods from 2001 to 2003. The accident, in fact, had no effect on third quarter earnings. Led by Melnyk, Biovail intentionally misstated both the effect of the accident on Biovail's third quarter earnings as well as the value of the product involved in the truck accident. The Commission's complaint alleges that in October 2003 Biovail and some of its executives schemed to deceive investors and analysts by falsely attributing nearly half of Biovail's failure to meet its third quarter 2003 earnings guidance to a truck accident involving a shipment of one of Biovail's products. Four current or former Biovail senior executives still face SEC charges: former chairman and chief executive officer Eugene Melnyk former chief financial officer Brian Crombie current controller John Miszuk and current chief financial officer Kenneth G. When it ultimately became impossible to continue concealing the company's inability to meet its own earnings guidance, Biovail actively misled investors and analysts about the reasons for the company's poor performance.īiovail settled the Commission's charges and will pay a $10 million penalty. The Commission's complaint alleges that present and former senior Biovail executives, obsessed with meeting quarterly and annual earnings guidance, repeatedly overstated earnings and hid losses in order to deceive investors and create the appearance of achieving earnings goals. The Securities and Exchange Commission today charged Canadian pharmaceutical company Biovail Corporation and its former CEO, former CFO, and two current senior executives with engaging in a number of fraudulent accounting schemes and making a series of misstatements to analysts and investors. filed March 24, 2008) SEC Charges Biovail Corporation and Its Former CEO, CFO and Two Current Senior Executives With Securities Fraud Biovail Settles Charges and Agrees to Pay $10 Million Civil Penalty

Biovail Corporation, Eugene Melnyk, Brian Crombie, John Miszuk, and Kenneth G. 20506 / MaAccounting and Auditing Enforcement Release No. SECURITIES AND EXCHANGE COMMISSION Litigation Release No.

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