ICN Chairman Might Face SEC Ban, Firm Says
ICN Pharmaceuticals Inc. said Friday that federal regulators might seek to oust controversial Chairman Milan Panic as an officer and director of the drug company in connection with alleged trading violations involving ICN stock.
District officials with the Securities and Exchange Commission urged the agency to seek the ban as well as penalties of up to $1 million against Panic in connection with his sale of 55,000 shares of company stock in November 1994, the company said.
The officials also recommended that the agency seek fines of up to $500,000 against the Costa Mesa drug manufacturer, according to ICN.
Panic sold the stock after learning that the U.S. Food and Drug Administration would not approve the company’s drug ribavirin as a stand-alone treatment for the liver ailment hepatitis C. The company did not disclose the FDA’s decision until three months later. ICN’s stock plummeted after that announcement.
Arnold Burns, a lawyer for Panic and ICN, denied any improprieties and said that before the end of this month he will ask the SEC to drop the matter.
The alleged insider trading triggered an SEC investigation, a grand jury investigation and a shareholder lawsuit. Last summer, Panic and the company settled the shareholder suit for $15 million.
An SEC official declined to comment Friday on the ICN announcement.
A parallel criminal investigation by the grand jury continues, though Burns said he has heard nothing about that investigation for months. A spokesman for the U.S. attorney’s office in Los Angeles would not comment.
Bob Back, an analyst, said possible action against Panic or ICN would not affect the company’s future.
He said that most of its $700 million in sales arise now from Eastern Europe and Russia, markets outside the scope of the investigations.
Even if the government were to prevail and force Panic to step down at ICN, President Adam Jerney could step into the top slot, ensuring a smooth transition, Back said.
ICN has had a history of run-ins with the SEC. In 1977, the agency sued Panic and the company, alleging securities violations. In 1991, the agency again made similar allegations against the chairman and ICN.
In both cases, Panic and ICN agreed to refrain from future violations of securities laws. They admitted no wrongdoing.
