CVS settles SEC investigation for $20 million

CVS Caremark has finalized a $20 million settlement with the Securities and Exchange Commission over accusations that the company misled investors and used improper accounting to boost its performance several years ago.

CVS has mail order and tech operations in Mount Prospect, Northbrook, Bannockburn and Linconshire.

The drugstore chain and pharmacy benefits manager had announced the settlement last August, when it also said it neither admitted nor denied anything in reaching the agreement.

The SEC accused CVS Caremark of misleading investors by failing to report in 2009 bond offering documents that it had recently lost significant contract revenues in its pharmacy benefits management business, which process mail-order prescriptions and runs drug plans for employers and other clients.

The regulator said that misled investors about future results from that segment.

“CVS broke faith with investors in both its stock and its bonds by disguising significant setbacks for its pharmacy benefits management business,” said Andrew Ceresney, director of the SEC's enforcement division, in a statement.

CVS Caremark Corp. also runs the nation's second-largest drugstore chain, behind Walgreen Co. The SEC also said CVS made improper accounting adjustments that overstated results from that business during the same time frame.

CVS executive Laird Daniels has agreed to pay a $75,000 penalty and will be barred for at least a year from practicing as an accountant for any publicly traded company or entity regulated by the SEC, the agency said.

Daniels is senior vice president of international operations and business development for the company.

The Woonsocket, R.I., company said Tuesday that the matter is now fully resolved. It had said in August it wouldn't have to restate earnings, and it had already set aside money for the penalty.