SEC probes former Salix CEO, CFO over investor disclosure-source

Tue Feb 9, 2016 2:21pm EST
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By Sarah N. Lynch

WASHINGTON Feb 9 (Reuters) - U.S. securities regulators are investigating whether former top executives at Salix Pharmaceuticals misled investors in connection with the company's 2014 disclosure that its drug inventory levels were much higher than previously reported, according to a person familiar with the probe.

The U.S. Securities and Exchange Commission's investigation is focusing on what roles former Salix Chief Executive Officer Carolyn Logan and former Chief Financial Officer Adam Derbyshire may have played in the disclosures, the source said.

It remains to be seen if the ongoing probe will ultimately lead to civil charges against the executives, said the source, who spoke anonymously because the matter is not public.

Valeant Pharmaceuticals International Inc, which acquired Salix for about $11 billion last April, said in an October financial filing that Salix is facing an SEC investigation over disclosures and accounting issues related to the inventory amounts in its distribution channel.

It had not been previously reported that the former CEO and CFO of Salix are major subjects of the SEC investigation.

Logan and Derbyshire resigned from Salix in the months leading up to Valeant's takeover of the company, with Derbyshire stepping down in late 2014 and Logan in early 2015.

In late March 2015, just before Valeant's acquisition was complete, the board voted to claw back all of the two former executives' unvested equity and to cancel their health benefits.

Thomas Sporkin, an attorney for Derbyshire, and F. Whitten Peters, an attorney for Logan, declined to comment on the probe.   Continued...