Valeant Pharmaceuticals International Inc. is reportedly under trouble after a short-seller "attacked" the company.
According to the Wall Street Journal, Andrew Left, who heads short-selling research firm Citron Research, said to investors that although they should not expect anything "earth-shattering," that he would reveal issues a new report on Canada's Valeant on Monday.
Left also said that he plans to update his view of the company, which includes comments about Valeant's "corporate culture." To give an idea what short sellers do — simply put, they wager against stocks.
He tweeted last Friday that he planned a new report on the company, following his Oct. 21 report that accused it of using specialty pharmacies for "phantom sales" to inflate its financial results. In the tweet, he said that Citron would "update full story, dirtier than anyone has reported!!!"
Similarly, Street Insider reported that Left did not have plans for further major allegations against Valeant, after having consulted with lawyers. In addition, his lawyers also asked him how sure he was about what he had in mind to publish and asked it "on a scale of one to 10." He said that he was only at eight, which prompted his lawyers to advise him to "let the story evolve."
As for Valeant, the company defended its accounting in an Oct. 26 investor call while saying that it was established a board committee to look at the allegations surrounding its relationship with specialty pharmacy, Philidor Rx Services LLC.
In a statement made this Sunday, Valeant called Left's claims as "sensational" and "false and misleading" while adding that it was "confident in our compliance with applicable accounting rules, regulation and laws."
The company further reiterated its previous comments that Left's statements were an attempt to drive down its stock price and it has asked the Securities and Exchange Commission to investigate Left and his company, Citron Research.
It's no surprise that Valeant is furious as according to Business Insider, Left's tweet (which as of now has been retweeted 184 times) have sent the company's shares lower. The stock ended down $17.70 or down by 15.87 percent, at $93.81 per share.
According to Valeant representative Laurie Little, "Mr. Left and Citron have already made one set of false claims about Valeant's business in an intent to profit by driving down our stock."
"We have shown his previous charges to be completely untrue, and our outside counsel has met with the SEC to request they investigate him. We have no doubt that he will continue to mislead investors about our business, and we will be ready to respond accordingly."
As of now, Left has yet to disclose his current position for his bet against Valeant.
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