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Deloitte & Touche, one of the Big Four accounting firms, has paid $1 million to settle charges that it permitted an employee it knew was an inferior accountant handle the books of San Diego biotech Ligand Pharmaceuticals. The story was reported in the Dec. 11 issue of the New York Times. The Public Company Accounting Oversight Board had filed the complaint. It charged that Deloitte knew that the San Diego audit partner, James Fazio, had performed poor audits in the past, but he was allowed to handle the Ligand account. He is no longer with the firm. Ligand's stock soared from $4 in early 2003 to almost $24 in spring of 2004, on reports that sales of a painkiller and cancer treatment were soaring. Actually, the sales gains came greatly from aggressive programs to push the products on wholesalers. The big campaigns to stuff the channels came particularly at the end of quarters, when the company was trying to meet Wall Street expectations. Ligand stock eventually plunged as actual sales fell off. It's now a bit under $5. The adventure is quite similar to that at Peregrine Systems, in which there have been several criminal convictions.
Deloitte & Touche, one of the Big Four accounting firms, has paid $1 million to settle charges that it permitted an employee it knew was an inferior accountant handle the books of San Diego biotech Ligand Pharmaceuticals. The story was reported in the Dec. 11 issue of the New York Times. The Public Company Accounting Oversight Board had filed the complaint. It charged that Deloitte knew that the San Diego audit partner, James Fazio, had performed poor audits in the past, but he was allowed to handle the Ligand account. He is no longer with the firm. Ligand's stock soared from $4 in early 2003 to almost $24 in spring of 2004, on reports that sales of a painkiller and cancer treatment were soaring. Actually, the sales gains came greatly from aggressive programs to push the products on wholesalers. The big campaigns to stuff the channels came particularly at the end of quarters, when the company was trying to meet Wall Street expectations. Ligand stock eventually plunged as actual sales fell off. It's now a bit under $5. The adventure is quite similar to that at Peregrine Systems, in which there have been several criminal convictions.