Bristol-Myers Fraudulent Scheme Class Action Lawsuit

Nature of The Action

The defendants named in this Action engaged in a fraudulent scheme of massive proportions involving over S2 billion of improperly recorded sales. The scheme entailed misleading investors into believing that Bristol-Myers was legitimately meeting or exceeding Wall Street's published estimates for the Company's quarterly and yearly earnings and growth when, in reality, the Company "made its numbers" only because it recognized revenue in violation of the most basic principles of GAAP. Now, Bristol-Myers has finally admitted that it improperly booked billions of dollars of revenues from inventory that it stuffed into the Company's distribution channels, thereby making it appear as if the Company's sales of its most profitable drugs were booming when, in fact, they were falling well behind investor expectations.

Bristol-Myers also has admitted that "senior management" was engaged in a concerted effort to artificially inflate the Company's earnings through a host of accounting improprieties carried out at the end of quarters for the purpose of manufacturing enough revenue to meet sales and profits targets. 

Owning up to the defendants' misconduct, on March 10, 2003, Bristol-Myers announced the restatement of its financial results for 1999. 2000, 2001 and the first two quarters of 2002 (the "Restatement"). In so doing, the defendants admitted that they stuffed the Company's distribution channels through the improper use of incentives, which they offered to the Company's wholesalers "towards the end of a ptiter in order to ineentivizc wholesalers to purchase products in an amount sufficient to meet the Company's quarterly sales projections established by the Company's senior management." (2001 Form 10-K/A (Amendment No. 1) filed by Bristol-Myers with the SEC on March 18, 2003 ("Form 10-K/A") at 2, 15, 21, 48). Thus, the Company has admitted that it had no legitimate business purpose for engaging in this "channel-stuffing," but rather committed this misconduct for the sole purpose of defrauding investors. 3. The Company also admitted that the defendants used a panoply of accounting tricks to manage its earnings.

For example, the defendants established "cookie jar" reserves in connection with asset divestitures and acquisitions, and for so-called "restructuring activities." They then improperly reversed these reserves into earnings or charged expenses against them in order to manipulate the Company's financial results for the purpose of meeting Wall Street estimates. Indeed, the Company admitted that reserves "were established inappropriately, as there does not appear to have been any related quantifiable or specific category of liability supporting the establishment of [the reserves] and that [the reserves] were ultimately.

Lead Plaintiffs bring this action as a class action pursuant to Federal Rules of Civil Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons or entities who purchased Bristol-Myers common stock during the period October 19, 1999 through and including March 10, 2003 (the "Class Period"), and who suffered damages thereby (the "Class").

Excluded from the Class are:

(i) the defendants; (ii) members of the immediate family of each of the Individual Defendants; (iii) any entity in which any defendant has a controlling interest; (iv) any parent, subsidiary or affiliate of Bristol-Myers; (v) any person who was an officer or director of Bristol-Myers or any of its subsidiaries or affiliates during the Class Period; and (vi) the legal representatives, heirs, predecessors, successors or assigns of any of the excluded persons or entities specified in this paragraph.