Few words can spark a massive sell-off in a stock like the word “investigation.” Here’s a look at three big-name stocks that are currently dealing with some form of investigation of their business practices:Valeant (VRX), Mallinckrodt (MNK) and SunEdison (SUNE).
Valeant (VRX)
VRX’s woes have gotten a lot of headlines because of the company’s high-profile investors like Bill Ackman. VRX’s problems started back in September when Democratic members of Congress began calling for VRX to be subpoenaed over “massive” price hikes for two of its heart drugs. Valeant then confirmed in October that it had been subpoenaed by U.S. prosecutors who were investigating the company’s patient assistant programs, drug pricing and distribution.
Then, in a game-changer, on October 21, Citron Research accused VRX of using shady specialty pharmacies, such as Philidor, to inflate revenues. The research report sparked a 40% sell-off in VRX.
So far in 2016, things have gone from bad to worse. In February, Valeant disclosed an ongoing SEC investigation. It also withdrew its 2016 guidance. Finally, just last week, VRX cut its 2016 revenue guidance by 12 percent. VRX also warned investors that a delay in its annual earnings report could trigger a debt default. The latest piece of news sent Valeant shares tumbling another 53%.
Mallinckrodt (MNK)
In the wake of the VRX publicity, Citron released…
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