Raises Concern with Company's Pattern of Partial and Delayed Disclosures During Critical Period
WASHINGTON, April 22 /PRNewswire/ -- The CtW Investment Group filed a letter of complaint with the Securities and Exchange Commission today, seeking an inquiry into insider transactions by CVS Caremark Corporation (NYSE: CVS) Chairman and CEO Thomas Ryan and other senior executives.
Citing sales between August and November 2009 of 1.5 million CVS shares, for a combined profit of $17.3 million, by Mr. Ryan and three other senior executives – Howard McClure, Executive Vice President and then-President of the pharmacy benefit management (PBM) segment, David Rickard, outgoing Chief Financial Officer, and Douglas Sgarro, Chief Legal Officer – CtW expressed concern that the sales may have been made while the executives were in possession of significant non-public information.
"What concerns us about these sales is that the executives, including Chairman and CEO Tom Ryan, may have traded their shares at the same time that the Company had not fully disclosed what it knew about how its PBM segment was faring, news that caused CVS share price to plummet when it was finally disclosed to shareholders on November 5," said William Patterson, Executive Director of the CtW Investment Group. "We believe the matter warrants an inquiry by the SEC."
On August 4, 2009 Mr. Ryan had made optimistic earnings projections for 2010 – which may have been overstated even at the time according to CtW – that were not subsequently scaled back until November 5, 2009, despite evidence that at least some of the big losses and the overall performance problems for the PBM segment may have been known to the Company months earlier. When the 2010 business losses were finally announced to shareholders on November 5, 2009 – along with the news that the Company had been under investigation by the Federal Trade Commission since August – CVS share price fell 20% in one day, wiping away more than $10 billion in shareholder value. Throughout 2009 the Company was under tremendous pressure to demonstrate to shareholders that CVS' acquisition of the PBM Caremark was a success, which CtW contends made the disclosure deficiencies particularly significant.
The CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a coalition of unions representing 5.5 million members, to enhance long-term shareholder value through active ownership. These funds are substantial long-term CVS Caremark shareholders.
|SOURCE Change to Win|
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