Cardinal settles SEC accounting investigation, pays $35 million fine

Cardinal Health Inc. on Thursday agreed to hire an independent consultant and pay a $35 million dollar fine to resolve an SEC investigation by accusing the medical products and services company of accounting irregularities and inflating earnings reports.

The company had previously set aside the $35 million in anticipation of the settlement with the Securities and Exchange Commission. The outside consultant will review its policies and procedures.

The SEC began investigating the company in October 2003 over its accounting treatment of money it got from vitamin manufacturers, and the investigation later was expanded to include its core pharmaceutical distribution business.

After the accounting scandal, Cardinal began its own internal investigation, which resulted in restatements for the company's annual and quarterly reports for 2002-2004. The company's chief financial officer quit in 2004. Other employees were disciplined or fired.

Cardinal created a position of chief ethics and compliance officer, and has set aside $600 million to possibly settle a lawsuit filed by stockholders after the accounting practices became public.