CVS To Pay SEC $20 Million For Problematic Longs Drug Stores Filings

CVS Caremark (NYSE:CVS) on Friday (Aug. 2) announced that it is paying a $20 million civil penalty to the U.S. Securities and Exchange Commission (SEC) because of the way it reported its acquisition of the Longs Drug Stores chain back in 2008.

Neither CVS nor SEC officials were especially specific about the nature of the filing shortcomings, but CVS said the problematic paperwork involved "certain public disclosures made by (CVS), transactions in (CVS) securities by certain current and former employees and certain aspects of the purchase accounting adjustment related to the October 2008 Longs Drug Stores acquisition."

CVS didn't admit guilt in the matter, instead paying the penalty under a "no admit or deny" basis. Recent SEC policy changes may make such efforts more difficult soon, with companies being forced to admit guilt when paying fines in "egregious" cases. It's not clear whether this matter would have been considered egregious, especially because it's not clear what the chain was accused of doing.

The settlement, CVS said, "will resolve a number of alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934, including certain anti-fraud provisions of those statutes." (Wonder what number they had in mind? Given that zero is a number, the phrase "a number of" always worries me.)

Also, the chain stressed that it had already set aside enough money to cover the penalty. "The settlement will not require CVS Caremark to restate its earnings for any reporting period," CVS said.

The settlement remains subject to completion of final documentation and approval by the Commission and federal court.

For more:
- See Wall Street Journal story
- See Reuters story
- See CVS statement

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