UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
Securities Exchange Act of 1934
Release No. 41751 / August 17, 1999
Accounting and Auditing Enforcement
Release No. 1154 / August 17, 1999
Administrative Proceeding
File No. 3-9976
In the Matter of
INAMED CORPORATION
Respondent.
ORDER INSTITUTING
PROCEEDINGS PURSUANT TO
SECTION 21C OF THE
SECURITIES EXCHANGE ACT OF
1934, MAKING FINDINGS AND
IMPOSING A CEASE-AND-DESIST
ORDER
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate and in the public interest that public administrative
proceedings be, and hereby are, instituted pursuant to Section 21C of
the Securities Exchange Act of 1934 ("Exchange Act") to determine
whether Inamed Corporation ("Inamed") violated or caused violations of
Sections 10(b), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and
Rule 10b-5 thereunder.
II.
In anticipation of the institution of these administrative
proceedings, Inamed has submitted an Offer of Settlement ("Offer")
that the Commission has determined to accept. Solely for the purposes
of these proceedings and any other proceedings brought by or on behalf
of the Commission or to which the Commission is a party, and prior to
hearing and without admitting or denying the findings set forth
herein, except as to jurisdiction over it and over the subject matter
of these proceedings, which Inamed admits, Inamed consents to the
entry of this Order Instituting Proceedings Pursuant to Section 21C of
the Securities Exchange Act of 1934, Making Findings and Imposing A
Cease-and-Desist Order ("Order"). The Commission has determined that
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
ORDER INSTITUTING PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934,
The Securities and Exchange Commission deems it appropriate and in the public interest that
Solely for the purposes of these proceedings and any other proceedings brought by or on
Imposing A Cease-and-Desist Order.
Inamed's common stock is registered with the Commission pursuant to Section 12of the Exchange
Inamed replaced its senior management in the first quarter of 1998 after the events that gave
In addition, on April 15 and May 15, 1997, Inamed issued materially misleading press releases
Inamed also failed to devise and maintain a system of internal accounting controls sufficient
In January 1996, Inamed raised approximately $35 million through a private placement offering
A covenant in the indenture required Inamed to meet certain financial conditions, including
the company agreed to issue to the note holders additional shares of common stock equal to
Inamed's capital and surplus had dropped below the minimum required to remain listed on the
Shareholder equity was thus reported at $2,493,730, or only approximately $500,000 more than
In fact, for the six-month period ended June 30, 1996, Inamed reported pre-tax income of
1996 internal memorandum from the former chief executive officer and the former vice
This understatement caused material overstatements in Inamed's pre-tax income and shareholder
In the course of their audit for the year ended December 31, 1996, Inamed's independent
At the time, however, several other significant issues were still unresolved with Inamed's
In the press release Inamed reported a net loss of $7,074,992, or $0.91 per share, which
The entity provided Inamed flight-related services, as well as storage services, amounting to
Inamed Violated Section 10of the Exchange Act and Rule 10b-5 Thereunder
Section 10of the Exchange Act and Rule 10b-5 thereunder proscribe material misstatements or
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