SciClone (SCLN) Tumbles on SEC Investigation, U.S. DOJ FCPA Compliance Issues

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August 10, 2010 9:42 AM EDT

Shares of SciClone (Nasdaq: SCLN) are taking a tumble this morning as the company reported that they have been contacted by the U.S. SEC for an investigation. Shares are down 31% to $2.40 in the morning session.

According to the company's Q210 earnings press release: "Subsequent to the end of the quarter, as disclosed in the Company's 10Q to be filed today with the Securities and Exchange Commission (SEC), SciClone has been contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone. The Company has also been contacted by the Department of Justice (DOJ) who requested that the Company meet with the DOJ regarding its compliance with the Foreign Corrupt Practices Act (FCPA)...The Company intends to fully cooperate with the SEC and the DOJ in these matters."

In their 10-Q filing: "On August 5, 2010 SciClone was contacted by the SEC and advised that the SEC has initiated a formal, non-public investigation of SciClone. In connection with this investigation, the SEC issued a subpoena to SciClone requesting a variety of documents and other information. The subpoena requests documents relating to a range of matters including interactions with regulators and government-owned entities in China, activities relating to sales in China and documents relating to certain company financial and other disclosures. On August 6, 2010, the Company received a letter from the DOJ indicating that the DOJ was investigating Foreign Corrupt Practices Act issues in the pharmaceutical industry generally, and had received information about the Company’s practices suggesting possible violations."

In addition, BWS downgraded the shares from Buy to Hold, noting the U.S. SEC investigation overhang.

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