The SEC would not comment to StreetInsider.com on speculation that it is investigating Valeant Pharmaceuticals (NYSE: VRX) amid allegations related to its relationship with Philidor and R&O, accounting practices, and channel stuffing. "As per our policy, we can not confirm or deny an investigation or lack thereof," a spokesperson said.

Meanwhile Quebec regulator, Autorité Des Marchés Financiers (AMF) called the situation "worrying" although it does not have an active probe. The Canadian regulator said is it "watching very seriously the evolution of the situation."

The company contends the allegations from short seller Citron Research contains numerous errors, unsupported speculation and incorrect interpretations of facts and circumstance. The company is hosting a conference call next Monday to address them.

Shares of Valeant have dropped 39% this week amid the allegations and broader concerns about drug pricing. Shares last traded down 7% to $110.25 after dropping more than 20% earlier in the session.