Valeant Pharmaceuticals stock fell 7% on Monday on a strange bit of news that you don’t see in the market every day.
The embattled company’s board wrote a letter urging its outgoing CEO, Michael Pearson, to comply with a Congressional subpoena.
Pearson was supposed to be deposed on April 6th, but he didn’t show.
“The Board has requested Mr. Pearson’s cooperation in connection with a subpoena for deposition from the Senate Committee on Ageing prior to the Committee’s scheduled April 27 hearing. The Board understands that Mr. Pearson is in dialogue with the Senate Committee on Ageing regarding his deposition and that those discussions are ongoing.”
Because Pearson didn’t show up, members of the Senate Committee on Ageing will hold a business meeting this week to decide whether or not to initiate contempt proceedings against Pearson. They can move to initiate a criminal or civil investigation, and then the Department of Justice would carry it out.
Pearson’s lawyer responded to Congress’ meeting with a letter saying that he and his client have “serious concerns about the basic fairness of a sworn deposition at this stage” since it’s such a hectic time at the company, and the Senate could potentially ask Pearson about thousands of documents.
Based on the board’s statement, it seems they don’t agree with that. And that’s not something you see every day — a board telling its CEO to suck it up and go to Washington to answer questions under oath.
But then again, Valeant’s story is anything but ordinary. The former Wall Street darling stock has fallen over 80% since accusations of malfeasance from a short seller combined with government scrutiny of its pricing practices. Things were starting to look up a little after the company managed to renegotiate some of the terms of its over $30 billion dollar debt pile with creditors last week, but it doesn’t seem like that’s going to be enough to hold the stock together.
Here’s what Valeant’s stock chart is looked like today: