NEW YORK, July 29, 2004 (PRIMEZONE) -- The New York law firm of Wechsler Harwood LLP today announced that it has commenced an investigation against Cardinal Health, Inc. ("Cardinal" or the "Company") (NYSE:CAH) for violations of the Employee Retirement Income Security Act of 1974 ("ERISA") in relation to its handling of investments in the Company's employee retirement benefit plan (the "Plan").
In particular, the investigation focuses on whether the Company and certain Plan administrators breached their fiduciary duties by: (a) negligently misrepresenting and negligently failing to disclose material facts to the Plan and the Plan participants in connection with the management of the Plan's assets and (b) negligently permitting the Plan to purchase and hold Cardinal stock when it was imprudent to do so.
The material facts being investigated include, but are not limited to the allegations that, Cardinal failed to record, on a timely basis, litigation claims it owed, causing its earnings and assets to be artificially inflated. The Company also allegedly misclassified non-operating revenues as operating, giving a misleading picture of the Company to investors, and improperly accounted for the $22 million recovered from vitamin makers accused of overcharging Cardinal by booking such recoveries as revenue when the antitrust cases had not been resolved. Finally, it is alleged that defendants made misleading, materially incomplete statements about its transition to a fee-for-service model of drug distribution. On June 21, 2004, Cardinal announced that it received a subpoena from the U.S. Securities and Exchange Commission in connection with a formal investigation announced on May 14, 2004. Cardinal is also under investigation by the Department of Justice.
Cardinal's Chief Financial Officer, Richard J. Miller, abruptly resigned his post yesterday after certain financial reporting practices and judgments that occurred during his tenure had come under increasing scrutiny in ongoing investigations. The Company named J. Michael Losh in his place. It was also confirmed that Cardinal Treasurer Donna Brandin left the Company. Following this announcement, the stock closed at $44 per share after trading as high as $76 per share in May.
In June, a number of class actions were filed in the United States District Court for the Southern District of Ohio against the Company as well as Robert Walter and Richard Miller alleging violations Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
If you wish to discuss this investigation with an attorney or have any questions concerning this notice, your legal rights or any matter within our expertise, you may e-mail or call Wechsler Harwood who will, without obligation or cost to you, attempt to answer your questions. Wechsler Harwood has extensive experience in both federal securities and ERISA litigation and has taken a leading role in many important actions on behalf of defrauded shareholders. The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter.