Risk & Compliance

No Rx Required: CVS Probe Closed

The SEC and U.S. Attorney's office have ended their investigations into the drugstore operator's stock-options practices and relocation program.
Kate PlourdAugust 17, 2007

CVS Caremark Corp. has disclosed that both the Securities and Exchange Commission and the U.S. Attorney’s office have ended an inquiry into the drugstore operator’s stock-options-granting practices and relocation of Caremark Rx Inc. headquarters to Nashville from Birmingham.

In May 2006, an investigation was launched against Caremark Rx for its possible options backdating. The investigation began before CVS Corp. acquired Caremark Rx last March in a deal worth $26.5 million. Upon completion of the buyout, the company was renamed CVS Caremark Corp.

At the same time the SEC was investigating possible wrongdoing, Caremark was subpoenaed by the U.S. Attorney’s Office for the Southern District of New York for information related to its stock-options-granting practices. CVS Caremark said Friday that both agencies have completed their investigations and decided enforcement action will not be taken. The nature of the investigation into the relocation program was not disclosed.

Last month the SEC settled civil charges with two former CVS Caremark finance executives over a scheme that involved overvaluing the former CVS Corp.’s inventory of stuffed animals seven years ago. Without admitting or denying the allegations, former controller and principal accounting officer Larry Solberg and former treasurer Philip C. Galbo each agreed to pay civil penalties and disgorge gains.

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