Pharmaceutical Phraud; Yellen for a Hike; Wells Fargo-away

There’s a fungus among us…

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Image courtesy of emily9/FreeDigitalPhotos.net

There’s another pharmaceutical company today that’s in big trouble today and this time it has nothing to do with EpiPens. Today’s alleged fraudulent crimes are brought to us by former Valeant Pharmaceutical Inc. executive Gary Tanner and defunct Philidor Pharmaceutical Services LLC chief executive Andrew Davenport. Tanner and Davenport allegedly participated in a fraud and kick-back scheme that netted the two tens of millions of dollars. Gosh who knew the pharmaceutical industry could be such a hot bed for illicit activity? The two execs apparently didn’t disclose to insurers that the two companies were connected. Valeant played the part of the big fancy drug company and Philidor played the supporting role of the mail-order pharmacy that conveniently helped boost sales of Valeant’s drug offerings by making sure they filled Valeant prescriptions. Philidor graciously assisted patients in getting insurance coverage for considerably pricier Valeant drugs instead of cheaper alternatives. In the meantime, Philidor would then request to be reimbursed by the insurance companies. Davenport apparently scored over $40 million from the scheme while Davenport only walked away with a paltry $10 million worth of kickbacks. Clearly he needs to hone his fraud “A” game. The scheme ran from December 2012 until September 2015 with the criminal complaint being filed in Manhattan Federal Court. Back in August of 2015, Valeant’s stock hit an all-time closing high of $262.52. But it should come as no surprise that the stock has since lost more than 80% of its value for a number of reasons, each worse than the next. The stock was trading under $18 today.

1-2-3 hike!

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Image courtesy of Geerati/FreeDigitalPhotos.net

Janet Yellen (thankfully) stole the Wall Street spotlight from Donald Trump today announcing that a rate hike “could well become appropriate relatively soon.” Loosely translated, it means it could and most likely will happen soon so feel free to hold your breath. The decision not to raise the rate at the last meeting was because the labor market still wasn’t quite where the Fed wanted to see it.  But now things are looking up…fiscally speaking, that is, and with steady job growth, wage gains and signs that point to firming inflation, that rate hike is looking like a done deal. But I guess we’ll have to wait until December 13-14, the date of the Fed’s next meeting, to see when that move might officially happen. As for Janet Yellen herself, she stayed mum on the presidential election but said she plans to stay on in her post until January of 2018, when her term officially ends. Many assumed that Yellen would resign once Trump was elected considering he’s not exactly a fan of her monetary policies.  But the Dove of Wall Street let ’em know that she’s staying put, Trump or not.

Cry me a river…

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Image courtesy of David Castillo Dominici/FreeDigitalPhotos.net

Wells Fargo is getting some heavy doses of fiscal karma as it reported today that there were 44% fewer new account openings in October of 2016, compared to October 2015. That’s in addition to a 27% drop just from last month. As for credit card applications, those dropped by half to just 200,00 in October. There was a 3% increase in customer initiated closings over previous months as well. Because after all, why wouldn’t you choose to close an  account that you didn’t choose to open in the first place? However, Wells Fargo was at least savvy enough to make such predictions as October marked a full month since the lid was blown off the bank’s unauthorized accounts scandal as the settlement was disclosed on September 8 to the whopping tune of $185 million. But at least the bank finally and wisely decided to chuck sales goals for consumer bankers which were the primary culprit that ultimately led to the scandal. As for former CEO John Stumpf, he’s a free agent now, not that anyone’s going to be checking out his LinkedIn profile anytime soon.

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