[ackman pearson schiller valeant hearing] After months of delays, a Senate hearing, and a precipitous stock fall, Valeant Pharmaceuticals finally filed their annual 10-k report to the SEC Friday morning. The document has been delayed multiple times as the company reviewed financial documents related to a specialty pharmacy, Philidor, associated with the company. Once a Wall Street darling, Valeant's stock has fallen almost 70% since October, after the revelation of Philidor, accusations of malfeasance from a short seller, and government scrutiny over the company's drug pricing practices sent investors fleeing. Prominent hedge funds, including Bill Ackman's Pershing Square, were all pulled down by the tailspin. After a ton of drama, he now sits on the company's board, and CEO Michael Pearson, with whom Ackman once had a close relationship, is now on the way out. If the company had not filed its annual report by Friday, it would be in violation of its covenants with bondholders, risking default on its over $30 billion debt pile. A few new things in here as we see them: * It seems that Valeant just disclosed that the state of North Carolina has opened an investigation into the company in the report's risks section. According to the 10k, the relationship with Philidor misstated $58 million in revenues and $33 million in profit during fiscal year 2014. Additionally, the company misstated revenue in the first quarter of 2015, which reduces revenue by $21 million but actually increases profits by $24 million. Additionally, the ad hoc committee found "material weaknesses" in the financial reporting of the company, citing the culture of the company created by executives. From the 10k: These material weaknesses relate to the tone at the top of the organization and the accounting and disclosure for non-standard revenue transactions particularly at or near quarter ends. The improper conduct of the Company’s former Chief Financial Officer and former Corporate Controller, which resulted in the provision of incorrect information to the ARC and the Company’s independent registered public accounting firm, contributed to the misstatement of financial results. In addition, as part of this assessment of internal control over financial reporting, the Company has determined that the tone at the top of the organization, with its performance-based environment, in which challenging targets were set and achieving those targets was a key performance expectation, may have been a contributing factor resulting in the Company’s improper revenue recognition and the conduct described above. The company had already said that the CFO, Howard Schiller, was to blame for the misstatements. Schiller was removed from the company in late March. The company originally created the ad hoc committee in October 2015 after the Philidor scandal came to light. The committee then delayed the filing on March 21, stating that there was substantial misreporting in the company's financials. The committee then announced they had completed their review on April 5. _More to come..._ Join the conversation about this story » NOW WATCH: FORMER GREEK FINANCE MINISTER: The single largest threat to the global economy
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