Big Story 10

Akorn settles U.S. SEC claims stemming from financial restatement

(This version of the March 26 story corrects RIC coding for Fresenius SE)

(Reuters) - Akorn Inc and two former executives have agreed to settle claims stemming from inaccurate financial statements the generic drugmaker issued in 2014 that it later needed to restate, the U.S. Securities and Exchange Commission on Monday said.

Akorn, former Chief Financial Officer Timothy Dick and former Controller David Hebeda agreed to settle a lawsuit filed in federal court in Chicago. Dick and Hebeda each agreed to pay a $20,000 penalty, the SEC said.

Akorn will not have to pay any money as part of the settlement. It instead consented to a court order being entered enjoining it from future financial reporting and internal accounting control violations of the Securities Exchange Act.

The Lake Forest, Illinois-based company and two former executives agreed to settle the case without admitting or denying wrongdoing. Akorn and lawyers for Dick and Hebeda did not respond to requests for comment.

According to the SEC, in May 2016, Akorn restated its 2014 financial statements and acknowledged material weaknesses in its internal controls related to the company’s gross-to-net reserve accounts and estimates.

The SEC said the company also disclosed it overstated its 2014 net revenue by about 7 percent and income from continuing operations before taxes by 136 percent.

The SEC said Dick and Hebeda had supervisory responsibilities for Akorn’s internal accounting controls during that time.

Fresenius agreed in April 2017 to acquire Akorn in a deal that valued the maker of medical creams, ophthalmic drugs and oral liquids at $4.75 billion.

Last month, though, Fresenius Chief Executive Stephan Sturm said his company may back out of the planned acquisition if a probe it was conducting into data integrity at Akorn yielded evidence of wrongdoing.

Fresenius did not immediately respond to a request for comment.

Reporting by Nate Raymond in Boston; editing by Leslie Adler and Lisa Shumaker