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CVS to pay $20 million to settle SEC charges

Woonsocket, R.I. -- CVS Caremark Corp. agreed to pay $20 million to settle U.S. Securities and Exchange Commission charges that it misled investors in 2009 during a debt offering and by accounting improperly for an acquisition.

The SEC said CVS failed to disclose while marketing $1.5 billion of bonds in September 2009 having recently lost significant Medicare and contract revenue streams in its pharmacy benefits manager business.

After CVS disclosed the problems on November 5, 2009, the company’s share price fell 20%. The company further misled investors by manipulating its "retention rate," thereby inflating its ability to retain business, according to the SEC.

CVS was also accused of having in November 2009 manipulated accounting for its October 2008 purchase of Longs Drug Stores Corp. The SEC said the changes improperly boosted profit by as much as 11.7 cents per share for the third quarter of 2009, enabling CVS to exceed rather than miss analyst forecasts.

CVS did not admit or deny wrongdoing in agreeing to settle, and on Tuesday said it is not restating any financial results.