A former executive at the Canadian pharmaceutical company Valeant was arrested Thursday in connection with a probe of fraud allegations, according to federal prosecutors in New York. Former executive Gary Tanner was arrested in Pennsylvania while Andy Davenport, former head of the mail-order pharmacy Philidor Rx Services, was taken into custody in Arizona. Federal prosecutors have reportedly been investigating whether the Canadian company cheated investors by hiding its connections to the now defunct Philidor in a bid to boost sales.
The news pushed shares in the company lower on Wall Street, with stock trading down 4.4 percent shortly after 1600 GMT. Valeant in October 2015 severed ties with Philidor RX following sharp criticism over their relationship. Valeant was forced to restate its financial accounts as a result of faulty accounting related to Philidor.