Biovail founder Eugene Melnyk (photo) will be persona non grata in Canadian public company circles for a while. The Ontario Securities Commission (OSC), Canada's securities regulator, barred Melnyk from serving as an officer or director at a publicly traded firm for five years. The commission also ordered him to pay C$565,000 to cover the costs of its investigation into his alleged shenanigans.
As the Toronto Globe and Mail points out, the regulatory ban could throw a wrench into Melnyk's hopes for Trimel BioPharma, a new pharmaceutical company. Melnyk has been making plans to take Trimel public on the Toronto Stock Exchange, the Globe and Mail says. Melnyk is no longer connected to Biovail, which merged with Valeant Pharmaceuticals last year.
Melnyk was formally reprimanded for making misleading statements in a 2003 press release about a Biovail truck accident involving a shipment of its Wellbutrin antidepressant. The release indicated that the wreck would cause Biovail to fall short of its earnings targets, but regulators alleged Melnyk knew the company wouldn't lose as much revenue as the release stated. The OSC did not find any specific violations, but ruled Melnyk had acted "contrary to the public interest."
Melnyk's settlement with Canadian regulators comes after a similar deal with the U.S. Securities and Exchange Commission. Under that arrangement, Melnyk agreed to a five-year ban and $150,000 in penalties.