The Securities and Exchange Commission charged a GlaxoSmithKline subsidiary and its former chairman and CEO (PDF) with buying back stock at undervalued prices and defrauding employees and other shareholders.
Glaxo subsidiary, former CEO charged in stock scheme
The SEC alleges that Stiefel Laboratories, which was acquired by GlaxoSmithKline in 2009, omitted information from employees that would have alerted them that their stock was worth more, during a period from November 2006 to April 2009. The information was instead supplied to Charles Stiefel, the CEO at the time, some members of his family and some senior executives.
GlaxoSmithKline acquired Stiefel Laboratories, a Coral Gables, Fla.-based manufacturer of dermatology products, in 2009 for $2.9 billion.
The SEC said in a news release that the company and Stiefel profited at the expense of employee shareholders, who sold their stock based on misleading valuations provided by the company and were defrauded out of more than $110 million.
“Stiefel denies that it or Charlie Stiefel acted improperly or did anything to violate the securities laws,” according to a statement from a GlaxoSmithKline spokesperson. “Stiefel intends to vigorously defend itself against the SEC's complaint.”
According to the SEC, Stiefel mislead shareholders to believe that the company would not be sold about one month before the deal with GlaxoSmithKline was announced.
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