Irish pharmaceutical company Elan has agreed to pay $15 million to settle charges that it misled investors, the US Securities and Exchange Commission said.
The SEC said investors in 2000 and 2001 were falsely led to believe through regulatory filings and press releases that Elan had achieved record results through improvements in the company's business, but the gains were actually due to product divestitures and transactions within the company.
Elan settled without admitting or denying the allegations, as is typical in SEC enforcement cases. In a statement, chief executive Mr Kelly Martin said the settlement "removes uncertainty."
Once the biggest company on the Irish stock exchange, Elan's off-balance sheet units came under scrutiny after the 2001 collapse of US energy giant Enron.
The accounting probe sent Elan shares into a tailspin and brought the company close to bankruptcy and default on $2 billion in debt. "We've said all along that if we could settle this case in a manner that was in the best interests of our patients, shareholders and employees, we would do so," Elan spokeswoman Ms Anita Kawatra said.
During 2000 and 2001, Elan made materially misleading public statements that made it appear that the company was generating record revenue, net income and operating cash flow from drug sales and licensing activities, the SEC said.
The company also said that it was making significant progress toward becoming a fully integrated pharmaceutical company and that it would be generating $5 billion in annual revenue by 2005, the regulatory agency said.
The SEC said Elan failed to disclose that a substantial portion of its product revenue came from selling off drug product lines and rights, that its joint ventures paid license fees using money that Elan had provided to the venture partners, and that a sale of some joint-venture-related securities to an "unaffiliated third party" was actually to an organisation Elan had created.
In October, Elan recorded a $55 million charge for estimated legal liabilities, which was net of about $50 million of related insurance coverage.
The company said then it agreed to a $15 million settlement with the SEC and would pay $75 million to settle a class action shareholder lawsuit.
Elan also adjusted fourth-quarter loss widened to $82.5 million from a loss of $31.7 million a year earlier, due to reduced revenue following the sale of non-core businesses and the cost of launching new drugs. But the loss narrowed after excluding gains on divestment of businesses.