KV Pharmaceutical Faces U.S. SEC Stock-Options Probe

KV Pharmaceutical Co., the maker of women's health products and generic drugs, is being investigated by U.S. regulators for stock-option grants that resulted in the company restating 11 years of financial results.

KV Pharmaceutical was notified of the Securities and Exchange Commission investigation in December and expects to finish turning over documents and employee testimony by next month, the St. Louis-based company said today in a filing.

The company began its own probe of stock-option grants in 2006 after shareholder lawsuits. Chief Executive Officer Marc S. Hermelin previously agreed to repay $1.4 million.

The company's investigation concluded that ``no employee, officer or director of the company engaged in any intentional wrongdoing'' or knew the stock-option grants didn't comply with U.S. generally accepted accounting principles, the company said.

KV Pharmaceutical restated earnings from 1995 to 2006 and must still restate results from the last three quarters of 2007, the company said. The company expects to remain on the New York Stock Exchange list of late filers until its 2008 earnings are completed.

The drugmaker's 2007 annual report may also need to be restated because it didn't ``adequately address'' financial reporting risks associated with the company's stock-based options, income taxes and revenue recognition.

KV fell $1.36, or 5 percent, to $25.62 as of 4 p.m. in New York Stock Exchange composite trading. The stock declined 5.5 percent this year before today.

Source : www.bloomberg.com