Walgreens (WBA, $73.81 ) Pays $34.5 Million Penalty Following SEC's Allegations of Deliberate Inflating of Profit Forecast

When Walgreens announced its merger with Boots six years ago, it also told investors that the company would generate at least $9 billion in profit in 2016. But SEC has indicated that the figure was too far-fetched for the company and Walgreens’s top executives  knew all along.

On Friday, the SEC alleged that despite Walgreens's former CEO Greg Wasson and CFO Wade Miquelon knowing fully well that the pharmacy company would miss the  $9 billion target,  Walgreens continued to assure investors of that figure during earnings calls throughout 2013 and 2014.

It was in August 2014 that Walgreens admitted that it wouldn't be able to meet that projection, and it drastically slashed its 2016 adjusted operating profit target down to $7.2 billion. Investor shock led the firm’s stock to plummet more than 14% at the time.

Following SEC’s allegations that it misled  investors with an unrealistic profit expectation, Walgreens reached a settlement with the SEC by agreeing to pay a $34.5 million penalty - as announced on Friday. Wasson and Miquelon  will each pay a $160,000 penalty. However, Walgreens did not admit or deny the allegations in its settlement.

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.