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Valeant CEO asks SEC to investigate Citron

Valeant Pharmaceuticals shares stumbled on Monday after it said it has formed a committee to review allegations against the company.

Shares of Valeant were about 1.2 percent lower in early morning trading and fell more than 10 percent after the announcement. (Get the latest quote here.)

"Based on its review conducted to date Valeant also believes that the company is in compliance with applicable law," the company said in a release.

Valeant CEO Mike Pearson reiterated this message at a conference call later on Monday.

"In light of the recent allegations made regarding Philidor, however, the Board of Directors has decided to establish an ad hoc committee of the board to review allegations related to the company's business relationship with Philidor and related matters."

Valeant's link to Philidor and its option to buy the company came under scrutiny after a New York Times report said that Valeant and other drugmakers were using specialty drug distributors to circumvent barriers to raising prices.

Valeant added that growth may slow down if it ends its relationship with Philidor, but "not dramatically."

With regard to R&O Pharmacy, Valeant said R&O's lawsuit against against it is without merit and will soon file a counter lawsuit.

On Wednesday, a Citron Research note alleged Valeant uses a network of specialty mail-order pharmacies that the company controls to prop up sales of its high-priced drugs and to keep patients and their insurance companies from switching to less costly generic drugs. It goes so far as to call Valeant the "pharmaceutical Enron."

Valeant called the report "erroneous" in a statement and Pearson said Monday that Valeant's outside counsel is requesting the Securities and Exchange Commission to investigate Citron.

Citron's report sent Valeant's stock plunging more than 16 percent since its release. Valeant shares are also down nearly 30 percent in the last week.

Despite all this, hedge fund manager Bill Ackman said Wednesday he purchased an additional 2 million shares.

Read MoreBill Ackman buys 2M additional shares of Valeant

Valeant also said on Monday it had added Mason Morfit, the president of hedge fund ValueAct Capital, to its board.

ValueAct is Valeant's fourth-biggest shareholder, with a stake of about 4.4 percent, according to Thomson Reuters data.

Up to Friday's close of $116.16, Valeant's shares had lost nearly 35 percent of their value since the company received the federal subpoena.

CNBC's John Melloy, Everett Rosenfeld, Meg Tirrell and Reuters contributed to this report