Walgreens to pay $34.5 million over misleading earnings forecast
Walgreens Boots Alliance Inc. will pay more than $34 million to resolve Securities and Exchange Commission claims that the company's senior leadership failed to adequately disclose risks regarding its ability to reach earnings goals.
The company, former Chief Executive Officer Gregory Wasson and former Chief Financial Officer Wade Miquelon misled investors about increased risk that Walgreens would miss a key financial target that was announced in 2012 when the drugstore chain said it would merge with Alliance Boots, the SEC said in a statement Friday.
Walgreens, headquartered in Deerfield, initially said that by 2016, the combined entity would generate $9 billion to $9.5 billion in operating income and later reaffirmed the projection even after internal forecasts showed significant risk that the goal would be missed.
"Over multiple reporting periods, senior Walgreens executives misled investors about the company's public financial goal," Stephanie Avakian, co-director of the SEC's Enforcement Division, said in the agency's statement. "The penalty assessed against Walgreens is intended to punish and deter such conduct, which deprived investors of information necessary to make fully informed investment decisions."
Walgreens and the executives agreed to resolve the SEC's claims without admitting or denying wrongdoing, the agency said. In addition to the company's penalty, Wasson and Miquelon each agreed to pay fines of $160,000.