Skip to Content

Walgreens Pays $35 Million Fine to Settle SEC Claims That It Misled Investors

Walgreens Boots Alliance is paying a $34.5 million fine to the U.S. Securities and Exchange Commission to settle an investigation into whether its optimistic earnings projections misled the company’s investors, the SEC said Friday.

The securities agency charged Walgreens with misstating the risk that its 2012 merger with European drug-store chain Boots presented to the company’s financial performance. Walgreens bought Boots in a two-step merger, first agreeing to invest $6.7 billion in exchange for a 45% stake in Boots in 2012. In 2014, Walgreens paid another $15.3 billion to acquire the remaining 55% of the company.

After Walgreen’s initial investment in Boots in 2012, the SEC alleges, Walgreens told investors the combined company would generate revenue between $9 billion and $9.5 billion by 2016. Later, Walgreens ratcheted down that estimate, indicating to investors that the risks surrounding the merger had increased significantly.

Those warnings came too late, the SEC claims. Walgreens and its then-CEO Gregory Wasson and then-CFO Wade Miquelon “repeatedly publicly reaffirmed the projections without adequately disclosing the increased risk,” the agency said Friday. It was only after the merger was completed in 2014 that Walgreens warned its 2016 projections would be 20% lower than it previously had indicated. Walgreens stock fell by 14% on that announcement.

“Over multiple reporting periods, senior Walgreens executives misled investors about the company’s public financial goal,” Stephanie Avakian, the co-director of the SEC’s enforcement division, said in a statement. “The penalty assessed against Walgreens is intended to punish and deter such conduct, which deprived investors of information necessary to make fully informed investment decisions.”

Walgreens’ stock fell 1.2% Friday to $72.90 a share. The retailer’s shares have lost about a quarter of their value since peaking at $96 a share in the summer of 2015. Wasson and Miquelon no longer work for Walgreens.

Walgreens, Wasson, and Miquelon settled the SEC’s charges without admitting or denying them, an outcome that is typical of most SEC investigations into financial fraud. The rare exception to that rule came Thursday, when the SEC charged Tesla CEO Elon Musk with making “false and misleading” statements on Twitter about his plans for taking Tesla private. Musk reportedly refused the terms of the SEC’s settlement. Tesla shares fell 14% on Friday.