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Mylan Meeting Under SEC Probe

Mylan Meeting Under SEC Probe [The Pittsburgh Tribune-Review]

From Pittsburgh Tribune-Review (PA) (June 17, 2010)

Jun. 17--Mylan Inc. said Wednesday that it is cooperating with a Securities and Exchange Commission investigation to determine whether the generic drug maker gave confidential information to a group of analysts and select investors at a Sept. 9 meeting.

The SEC is concerned that if information was revealed to those who attended, it allowed them to purchase shares prior to a rally in Mylan stock.

The investigation first was reported by the Wall Street Journal.

In a research note issued yesterday, an analyst who attended the September meeting said he recalled that no new information was revealed at the Morgantown meeting. The analyst added that investors should take the news in stride until more information about the investigation is issued.

Sanford C. Bernstein & Co. LLC analyst Aaron Gal said he attended the September meeting but heard nothing out of the ordinary.

"We did not hear anything at the meeting that sounded different from previous company statements," Gal said in his research note.

He said such on-site meetings give investors an opportunity to meet what he called rank-and-file managers to gain perspective on their competence and experience.

"Investors also gain additional depth of understanding of a company at these meetings," Gal wrote. He added that investors can assess the mood of a company’s investors just by who attends such get-togethers.

Publicly-held companies providing information that could be expected to move their share price are required by law to disseminate the information publicly.

"The SEC requested information about the meeting for analysts and investors in September in Morgantown," Mylan spokesman Michael Laffin said yesterday. "We provided the information and are confident the communications made during the conference were entirely appropriate."

SEC spokesman John Heine told the Tribune-Review that the commission’s staff can’t confirm or deny investigations of any type.

The Journal reported that about 12 analysts who follow Mylan attended the meeting. The article said each analyst was permitted to bring a maximum of two investors to the meeting.

The SEC is trying to determine whether or not information was given at the meeting that caused Mylan’s share price to rise Sept. 10.

On the day prior to the Sept. 9 meeting, Mylan’s stock closed at $14.69 a share, with about 4.62 million shares traded. The day of the meeting, the company’s shares closed at $14.41. down 1.9 percent, but shares traded jumped to nearly 17.4 million -- a 275.6 percent jump from the previous day.

On Sept. 10, Mylan’s shares closed up 7.4 percent, at $15.48, while share volume rose another 15.3 percent, to just over 20 million. The following day, Mylan’s shares closed down 2.1 percent, at $15.16, while the number of shares traded fell nearly 60 percent, to about 8.1 million.

When Mylan released its third-quarter financial results on Oct. 29, the company beat analyst consensus estimates and its shares rose 5 percent.

Companies commonly meet with analysts and some investors, but there have been few cases since 2000 involving what is known as selective-information disclosure. The law -- known as Regulation FD, for Fair Disclosure -- was enacted that year.

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Posted: June 2010