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Valeant shares drop on report of criminal probe of ex-CEO and CFO

Valeant Pharmaceuticals' former CEO Michael Pearson and former CFO Howard Schiller are allegedly the focus of an accounting fraud case, Bloomberg reported, citing sources.

The company's U.S.-listed shares ended the session down about 12.3 percent.

The possible accounting fraud charges may be related to specialty pharmacy Philidor RX Services, people familiar with the matter told Bloomberg.

Sources told Bloomberg that U.S. prosecutors may be building a fraud case against the embattled pharmaceutical company and that charges could be brought forward in a matter of weeks.

Valeant said in a statement that it is "in frequent contact" and continues to cooperate with authorities, but declined to comment on "rumors about investigations, and cannot comment on or speculate about the possible course of any ongoing investigation."

Bruce Yannett, Pearson's attorney, declined to comment to CNBC. Legal representation for Schiller did not immediately respond to CNBC's request for comment.

Pearson was ousted from the company in March, a decision that a person familiar with the situation told CNBC "was not mutual."

The Canadian drugmaker came under fire when The New York Times reported that Valeant and other pharmaceutical companies were using a network of specialty pharmacies to sustain sales of their high-priced drugs and prevent patients and insurers from switching to cheaper generic drugs. Citron Research subsequently published a note calling Valeant the "pharmaceutical Enron."

Last year, Valeant pledged to sever ties with Philidor amid heightened scrutiny about the relationship between the two. Valeant also formed an ad hoc committee to review the allegations regarding Philidor. The U.S. Securities and Exchange Commission is investigating the relationship between the two companies.

Read the full report on Bloomberg.

— CNBC's Meg Tirrell contributed to this report.