June 16, 2010 / 10:26 PM / 9 years ago

UPDATE 1-Mylan signaled strong earnings to group - source

* Source says Mylan conveyed earnings excitement

* Does not recall specific earnings guidance

* WSJ says meeting subject of SEC inquiry (Rewrites first paragraph to mention investigation; adds background on Reg FD, earlier Schering-Plough fine)

By Ransdell Pierson

NEW YORK, June 16 (Reuters) - Attendees at a small Mylan Inc (MYL.O) meeting last September, reportedly the subject of a securities investigation, left the room with little doubt the generic drugmaker was expecting a good quarter, a source who was at the gathering said.

Shares of Mylan rose more than 7 percent the day after the meeting. The Wall Street Journal said on Wednesday that the U.S. Securities and Exchange Commission is probing whether Mylan disclosed confidential information to handpicked investors, allowing them to buy Mylan shares before the rally.

SEC spokesman John Nester declined to comment.

The Sept. 9 event was held at a company plant in West Virginia, where several dozen Wall Street analysts and investors heard remarks from company Chief Executive Robert Coury and company President Heather Bresch as part of a plant tour.

“I’m not aware of anything explicit they (Coury and Bresch) said on earnings guidance,” the Reuters source recalled, “but they said something to the effect they were very excited, that they looked forward to reporting the numbers. I gleaned they would have a positive quarter.”

Bresch, who had recently been promoted from chief operating officer, was especially enthusiastic about the results slated to be reported in late October, the source said.

“It was really more (her) comments,” the source said, “but the CEO indicated he was fairly excited as well. The implication from just about everybody who left the room was that they were going to have a good quarter.”

According to the Journal, Mylan said the SEC asked it for information related to the meeting. “We provided (the information) and are confident the communications made during the conference were entirely appropriate,” Mylan said, according to the report. A Mylan spokesman told Reuters he could not comment further.

Mylan’s stock fell 2.7 percent on Wednesday to close at $17.90 on Nasdaq.

Mylan did not broadcast the West Virginia meeting or disclose the information through an SEC filing, the Journal said, leaving the wider public unaware of the commentary.

Mylan on Oct. 29 reported better-than-expected quarterly results and raised its full-year 2009 profit outlook, lifting its shares 4.6 percent.

A decade-old federal rule, called Regulation Fair Disclosure, is designed to combat selective disclosure of information. Companies are encouraged to widely disseminate material information, such as through press releases.

In the event material information is inadvertently provided in a nonpublic setting, the law requires companies to publicize it promptly thereafter.

The first person ever penalized by Reg FD was Richard Kogan, former chief executive of drugmaker Schering-Plough Corp. The SEC investigated his private meetings in September 2002 with four institutional investors in Boston, three of which were among the company’s largest investors.

“At each of these meetings, through a combination of spoken language, tone, emphasis and demeanor, Kogan disclosed negative and material, nonpublic information regarding Schering’s earnings prospects,” including that the company’s 2003 earnings would significantly decline, the SEC found.

Shares of Schering-Plough plunged almost immediately after Kogan made a luncheon presentation to analysts and money managers at Putnam Investments, declining 17 percent over the next several days on four times normal trading volume.

As investors grasped for an explanation, Schering-Plough steadfastly declined to comment on reasons for the prolonged sell-off.

Kogan, who retired six months later, paid a $50,000 civil penalty to the SEC. Schering-Plough agreed to pay a $1 million civil penalty. (Reporting by Ransdell Pierson, Lewis Krauskopf and Rachelle Younglai; Editing by Richard Chang and Tim Dobbyn)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below