Biovail Corp

SEC charges Biovail with fraud The U.S.

Securities and Exchange Commission accused Canada's Biovail Corp and four current or former officers, including former Chief Executive Eugene Melnyk, of engaging in a number of fraudulent accounting schemes, the agency said on Monday.

The pharmaceutical company will pay $10 million to settle the SEC probe. Still facing charges are Melnyk, former Chief Financial Officer Brian Crombie, current Controller John Miszuk and current CFO Kenneth Howling. Biovail said on Monday that Howling and Miszuk are being reassigned to different non-officer positions within the company.

According to the complaint, the SEC said the current and former senior Biovail executives were obsessed with meeting quarterly and annual earnings guidance, and repeatedly overstated earnings and hid losses to deceive investors.

"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," the SEC said.

The 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 forecast to a truck accident involving a shipment of one of Biovail's products.

"The accident, in fact, had no effect on third quarter earnings," the SEC said. Shares of Biovail fell nearly 4 percent to $11.07 on the New York Stock Exchange on Monday. In Toronto, Biovail was off 4 percent at C$11.30.

Lawyers for the former and current executives were not immediately available to comment. ($1=$1.02 Canadian)

(Published by Reuters March 24, 2008)