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CVS Settles Investor Lawsuit

June 08, 2005|From Associated Press

PROVIDENCE, R.I. — CVS Corp. has agreed to a $110-million settlement of a shareholders' lawsuit that accused the company of making misleading statements and violating accounting practices.

The pharmacy chain filed the proposed settlement Monday in U.S. District Court in Boston.

CVS said Tuesday that the allegations in the lawsuit were unfounded.

"We agreed to the settlement purely as a business decision -- made in consultation with the company's insurers and counsel to avoid the diversion of resources and the uncertainties associated with any trial," said Douglas Sgarro, CVS' chief legal officer.

A federal judge will decide today whether to give preliminary approval to the settlement.

"We believe this is an excellent recovery for the class members and avoids the risk of continued litigation," said Deborah Weintraub, attorney for the lead plaintiff, the Plumbers & Pipefitters National Pension Fund, and a lawyer with Milberg, Weiss Bershad & Schulman in New York.

The lawsuit, filed in 2001, was to have gone to trial in federal court in Boston last month.

The shareholders' lawsuit alleged that CVS made false and misleading statements to artificially raise its stock prices.

It also accused the company of delaying accounting on merchandise discounts, counting the items' full value in its earning reports.

In addition, the lawsuit said CVS Chief Executive Thomas M. Ryan delayed for months reporting the company's plans to close 200 underperforming stores. It also alleged that Ryan sold 95,040 shares of CVS stock before telling investors that the company's second-quarter and full-year earnings would fall below projections in 2001.

CVS shares rose 11 cents to $29.14.

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