Accounting & Tax

Cardinal Health Founder May Face Charges

In 2004, the company came under SEC scrutiny and restated more than three years of results.
Stephen TaubJanuary 29, 2007

Cardinal Health disclosed that founder and chairman Robert D. Walter may face civil charges brought by the Securities and Exchange Commission over a previously disclosed accounting and financial reporting matter.

In a regulatory filing, Cardinal stated that Walter and four unnamed former officers had each received a Wells notice from the commission. Under SEC procedures, a Wells notice indicates that the staff has made a preliminary decision to recommend that the commission bring a civil action; recipients have the opportunity to respond to the SEC staff before a formal recommendation is finalized.

In June 2004, Cardinal disclosed that its audit committee, as well as the SEC and the U.S. Attorney’s Office for the Southern District of New York, were investigating how the company classified revenue from its pharmaceutical distribution business. Chief financial officer Richard Miller resigned a month later.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

That September, the company restated its results for the three prior years and for the first three quarters of fiscal 2004. The revisions related primarily to bulk deliveries to customers, cash discounts earned from suppliers in exchange for prompt payment, and balance-sheet reserve and accrual adjustments.

In its filing, Cardinal reiterated that settlement discussions with the SEC are continuing. Last January, the company reached an agreement-in-principle on the basic terms of a proposed settlement, which, according to Cardinal, the SEC staff was prepared to recommend to the commission. The deal would required the company to pay a $35 million penalty.