March 31, 2016 / 4:17 PM / 2 years ago

Regulator orders drugmaker Valeant management to cease trading

(Reuters) - Valeant Pharmaceuticals International Inc’s VRX.TO directors and key officers have received a cease-trade order by the securities regulator in the Canadian province of Quebec, on the company’s request, Valeant said on Thursday.

The headquarters of Valeant Pharmaceuticals International Inc., seen in Laval, Quebec November 9 2015. REUTERS/Christinne Muschi

In a separate statement, the Autorité Des Marches Financiers (AMF) said the order against trading shares takes effect Thursday and is in place for 15 days. Included in the order are Chief Executive Mike Pearson, Chief Financial Officer Robert Rosiello and board member Bill Ackman.

The order states that AMF intends to issue a new order if Valeant does not make filings by April 15.

The delay in Valeant filing its annual report poses a risk of debt default, Valeant said March 15, generating new scrutiny of the much-criticized company. Defaulting on debt could prompt lenders to demand faster repayment and place restrictions on Valeant’s ability to borrow.

The company is largely run out of the United States, but it is headquartered in Laval, a suburb of Montreal, Quebec. The company is also incorporated in the western Canadian province of British Columbia.

A spokesman for the British Columbia Securities Commission did not immediately respond to a request for comment.

In a statement, Valeant said it asked AMF for the cease-trade order, pending the filing of its 2015 audited financial statements.

“The company is working diligently and intends to make the required filings on or before April 29, 2016,” Valeant said.

The cease-trade order technically applies only to Quebec, but the practical effect of such orders in Canada, which does not have a national securities regulator, is to stop trading across the country, said Sylvain Theberge, spokesman for AMF, in an email to Reuters.

The persons affected have undertaken not to trade anywhere, including the United States, he said.

Theberge said Valeant is not under active investigation by AMF, but has been under “verification,” since October. He declined to elaborate.

Valeant shares rose 0.2 percent in Toronto and New York after earlier losses. The company’s stock has plummeted since August over a string of controversies, including U.S. government scrutiny of its drug price hikes and former ties to a specialty pharmacy.

The cease-trade order was first reported by the Wall Street Journal.

Reporting by Rod Nickel in Winnipeg, Manitoba; Additional reporting by Allison Lampert in Montreal; Editing by Jonathan Oatis

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