Over the weekend, our friend John Gavin at Probes Reporter revealed something disturbing to Valeant longs, namely that “New Data Now Confirms Valeant’s Undisclosed SEC Investigation.” This is what the report said:

Sunday Special UPDATE: Last week, on 23-Feb-2016, we published a report warning of the potential for a new and undisclosed SEC probe of Valeant. In a letter dated 22-Feb-2016, and just received by us on Saturday via US Mail, the SEC has now confirmed Valeant’s involvement in on-going enforcement proceedings that remain undisclosed as of this date. All we know about the SEC probe at this time is that it somehow pertains to the conduct, transactions, and/or disclosures of Valeant Pharmaceuticals.

The SEC’s letter now confirming on-going enforcement proceedings at Valeant has the same date as the press release put out by Valeant last week in which the company announced a restatement and delayed filings. (See, “Valeant Ad Hoc Committee has Made Substantial Progress in Its Review of Philidor and Related Accounting Matters”.) Despite the same date, the company remained silent on any new SEC investigation.

Updated Analysis and Opinion: We remain convinced that the now-confirmed SEC investigation of Valeant likely started last fall and absolutely should have been disclosed by now. Management may have their [strained] rationale for having not disclosed, but that matters little. The continued silence raises troubling questions about the overall quality of Valeant’s disclosures and the integrity of the management team that produces them

As it turns out, Gavin was right, and moments ago Valeant admitted as much:

  • VALEANT SAYS IT IS UNDER INVESTIGATION BY SEC

As Bloomberg adds, the Probe said to be separate from Salix investigation, Valeant spokeswoman Laurie Little comments in probe.

Whatever the probe may be, the company’s few remaining shareholders – warned repeatedly that there is never more than just one cockroach – decided to get the hell out, and sent the stock plunged by as much as 20% to fresh multi-year lows.

More notably, Bill Ackman who is long 21.6 million shares, just lost over $200 million in an instant once the stock crashed by over $10 once the headline hit (in addition to all the other losses suffered by Valeant earlier today).

One wonders just how much more pain Pershing Square’s LPs can suffer before they send Ackman that final redemption request. Pershing Square reveals its latest weekly performance report tomorrow night. As of this moment we expect nothing less than a 25% drop.





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