# UNITED STATES OF AMERICA > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A588891c8c8134571 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION ADMINISTRATIVE PROCEEDING File No. 3-19899 : : : Valeant Pharmaceuticals International, Inc. n/k/a Bausch Health Companies Inc., : : : Respondent. : In the Matter of ADMINISTRATIVE PROCEEDING File No. 3-19900 In the Matter of J. Michael Pearson, Respondent. : : : : : ADMINISTRATIVE PROCEEDING File No. 3-19901 In the Matter of Howard B. Schiller, Respondent. : : : : : ADMINISTRATIVE PROCEEDING File No. 3-19902 In the Matter of Tanya R. Carro, CPA, Respondent. : : : : : PROPOSED PLAN OF DISTRIBUTION I. OVERVIEW 1. The Division of Enforcement submits this Proposed Plan of Distribution (the “Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the “Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair Fund (the “Fair Fund”), comprised of civil money penalties paid by Valeant Pharmaceuticals International, Inc. n/k/a Bausch Health Companies (“Valeant”),1 J. Michael Pearson (“Pearson”),2 Howard B. Schiller (“Schiller”),3 and Tanya R. Carro, CPA (“Carro”)4 (collectively, “Respondents”) pursuant to four separate, but related settled orders (collectively, the “Orders”). 2. As described more specifically below, the Plan seeks to compensate investors who were harmed by the Respondents’ conduct described in the Orders, in connection with improper revenue recognition and materially misleading disclosures. As calculated using the methodology detailed in the Plan of Allocation (attached as Exhibit A), investors who purchased Valeant common stock between October 20, 2014 and April 28, 2016, inclusive, and/or Valeant bonds listed in Exhibit A between October 20, 2014 and October 29, 2015, inclusive, will be compensated for their losses. In the view of the Commission staff, this methodology constitutes a fair and reasonable allocation of the Fair Fund. 3. The Commission has custody of the Fair Fund and will retain control of the assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission retains jurisdiction over its implementation. II. BACKGROUND 4. On July 31, 2020, the Commission issued the Orders instituting and simultaneously settling proceedings against the Respondents. In the Orders, the Commission found that beginning in 2014, when announcing certain GAAP and non-GAAP financial measures, Valeant, among other things, misstated revenue transactions and included erroneous revenue allocations. For example, the Orders found that for five consecutive quarters Respondents touted double-digit same store organic growth, a non-GAAP financial measure that represented growth rates for businesses owned for one year or more. Much of that growth came from sales to Philidor, a mail order pharmacy Valeant helped establish, fund, and subsidize. The 1 See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10809 (July 31, 2020). 2 See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10810 (July 31, 2020). 3 See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10811 (July 31, 2020). 4 See Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Sections 4C and 21C of the Securities Exchange Act of 1934, and Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing a Cease-and-Desist Order, Securities Act Rel. No. 10812 (July 31, 2020). 2 Orders found that Valeant improperly recognized revenue relating to Philidor sales and did not disclose its unique relationship with or risks related to Philidor in its SEC filings and earnings and investor presentations. Valeant ended its ties to Philidor in October 2015 and restated its 2014 financial statements in April 2016, reducing the revenue that was improperly recognized. 5. The Orders also found that Valeant failed to disclose the material impact of certain revenue it received from drug wholesalers following a 500% increase of the price of a single drug that Valeant acquired in April 2015. Valeant erroneously attributed the resulting revenue to more than 100 unrelated products and did not record any as attributable to that drug. Additionally, in its SEC filings and earnings presentations for the second and third quarters of 2015 and its 2015 year-end report, Valeant failed to disclose the impact of that allocation on its GAAP and non-GAAP financial measures. 6. In their respective orders, the Commission found that Respondents violated the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act and, with the exception of Schiller, Rule 100(b) of Regulation G. The Commission also found that Valeant violated the reporting, books and records, and internal accounting controls provisions of the Exchange Act, and that the individual respondents caused some or all of these violations. Valeant, Pearson, Schiller, and Carro were ordered, among other things, to pay civil penalties in the amount of $45 million; $250,000; $100,000; and $75,000, respectively, for a total of $45,425,000 to the Commission. In each of the Orders, the Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties collected can be distributed to harmed investors. 7. Respondents have paid a collective total of $45,425,000.00 in civil penalties, as ordered, into their respective Fair Funds. The Fair Funds are currently on deposit in Commission-designated accounts at the United States Department of Treasury. Any interest accrued will be added to the Fair Funds for the benefit of investors harmed by the conduct described in the Orders. 8. On January 8, 2024, the Commission ordered that the Fair Funds created in each of the Orders be consolidated for the purposes of distribution administration.5 9. Respondents have paid in full. The Fair Fund has been deposited in a Commission-designated account at the United States Department of the Treasury, and any accrued interest will be added to the Fair Fund. III. DEFINITIONS As used in this Plan, the following definitions will apply: 10. “Administrative Costs” means any administrative costs and expenses, including without limitation the fees and expenses of the Tax Administrator and the Fund Administrator, tax obligations, bond premium expenses, and investment and banking costs. 5 Order Consolidating Fair Funds and Setting Deadline to Submit Proposed Plan of Distribution, Exchange Act Rel. No. 99284 (Jan. 8, 2024). 3 11. “Claim Form” means the form designed by the Fund Administrator, in consultation with the Commission staff, for the filing of claims in accordance with this Plan. The Claim Form will require, at a minimum, sufficient documentation reflecting any Preliminary Claimant’s purchases and dispositions of the Securities during the Relevant Period such that eligibility under the Plan can be determined, tax identification and other related information from the Preliminary Claimant as determined necessary by the Fund Administrator in coordination with the Tax Administrator, and a certification that the Preliminary Claimant is not an Excluded Party. 12. “Claim Status Notice” means the notice sent by the Fund Administrator within sixty (90) days of the Claims Bar Date to any Preliminary Claimant that submitted a deficient Claim Form. The Claim Status Notice will provide to each Preliminary Claimant whose claim is deficient, in whole or in part, the reason(s) for the deficiency and in the event the claim is denied, the Claim Status Notice will state the reason(s) for such denial. The Claim Status Notice will also notify the Preliminary Claimant of the opportunity to cure any deficiency, request reconsideration, or dispute the determination made by the Fund Administrator and provide instructions regarding what is required to do so. 13. “Claims Bar Date” means the date established in accordance with this Plan by which a Preliminary Claimant’s Claim Form must be postmarked or submitted electronically in order to receive consideration under the Plan. The Claims Bar Date will be ninety (90) days after the initial mailing of the Plan Notice. Claim Forms submitted by Preliminary Claimants postmarked or received after the Claims Bar Date will not be accepted unless the Fund Administrator is directed to do so by the Commission staff. 14. “Determination Notice” means the written notice sent by the Fund Administrator to all Preliminary Claimants who timely submitted a Claim Form notifying the Preliminary Claimant of its eligibility determination. The Determination Notice will further provide each Preliminary Claimant that is determined to be an Eligible Claimant with his, her, or its calculated Recognized Loss. The Determination Notice will constitute the Fund Administrator’s final ruling regarding the eligibility status of the claim. 15. “Distribution Payment” means a payment from the Fair Fund to a Payee in accordance with the terms of this Plan. 16. “Eligible Claimant” means a Preliminary Claimant, who is not an Excluded Party, who submitted a valid Claim Form and has suffered a Recognized Loss, as calculated in accordance with the Plan of Allocation. 17. “Excluded Party” means: (a) The Respondents; (b) Present or former officers or directors of Respondents or any assigns, creditors, heirs, distributees, spouses, parents, dependent children or 4 controlled entities of any of the foregoing Persons or entities; (c) Any employee or former employee of the Respondents or any of its affiliates who has been terminated for cause or has otherwise resigned, in connection with the conduct described in the Order; (d) Any Person who, as of the Claims Bar Date, has been the subject of criminal charges related to the conduct described in the Order or any related Commission action; (e) Any firm, trust, corporation, officer, or other entity in which Respondents has or had a controlling interest; (f) The Fund Administrator, its employees, and those Persons assisting the Fund Administrator in its role as the Fund Administrator; or (g) Any purchaser or assignee of another Person’s right to obtain a recovery from the Fair Fund for value; provided, however, that this provision will not be construed to exclude those Persons who obtained such a right by gift, inheritance or devise. The Claim Form will require claimants to certify that they are not an Excluded Party. All Excluded Parties will be deemed ineligible to participate in the distribution of the Fair Fund. 18. “Fair Fund” means the fund created by the Commission pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondents’ violations described in the Order. 19. “Net Available Fair Fund” means the Fair Fund, plus any interest or earnings, less Administrative Costs. 20. “Payee” means an Eligible Claimant whose Recognized Loss calculates, in accordance with the Plan of Allocation, to a distribution amount equal to or greater than $10.00 who will receive a Distribution Payment. 21. “Person” means natural individuals as well as legal entities such as corporations, partnerships, or limited liability companies. 22. “Plan Notice” means a written notice from the Fund Administrator to Preliminary Claimants informing them of the Fair Fund; the Plan and its eligibility requirements; explaining how to submit a claim, including instructions for any online claims process; and how to obtain a copy of the approved Plan and Claim Form by request or from the Fair Fund’s website. The Plan Notice will also be available on the Fair Fund’s website that is maintained by the Fund Administrator. The initial mailing of the Plan Notice is the mailing sent by the Fund Administrator in accordance with paragraph 40. 5 23. “Plan of Allocation” means the methodology used by the Fund Administrator to calculate whether a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is attached as Exhibit A. 24. “Preliminary Claimant” means a Person, or their lawful successors, identified by the Fund Administrator as having a possible claim to recover from the Fair Fund under this Plan, or a Person asserting prior to the Claims Bar Date that he, she, or it has a possible claim to recover from the Fair Fund under this Plan, as a result of transactions in the Securities during the Relevant Period. 25. “Recognized Loss” means the amount of loss calculated in accordance with the Plan of Allocation. 26. “Relevant Period” means: (a) October 20, 2014 through April 28, 2016, inclusive, for investors in Valeant common stock; and (b) October 20, 2014 through October 29, 2015, inclusive, for investors in Valeant bonds listed in Table C of the Plan of Allocation. 27. “Securities” means shares of Valeant common stock traded during the Relevant Period and/or bonds issued by Valeant during the Relevant Period. 28. “Summary Notice” means the notice published in internet media that includes, at a minimum, a statement of the purpose of the Fair Fund and the Plan, the means of obtaining a Claim Form, and the Claims Bar Date. The Summary Notice will be published electronically within ten (10) days of the initial mailing of the Plan Notice. 29. “Third-Party Filer” means a third party, including without limitation a nominee, custodian, or an intermediary holding in street name, who is authorized to submit and submits a claim(s) on behalf of one or more Preliminary Claimants. Third-Party Filer does not include assignees or purchasers of claims that are excluded from receiving Distribution Payments under paragraph 17 above. IV. TAX COMPLIANCE 30. On February 5, 2024, the Commission appointed Miller Kaplan Arase LLP as the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of the Fair Fund.4 The Tax Administrator will be compensated for reasonable fees and expenses from the Fair Fund in accordance with its 2022-2024 Engagement Letter Agreement with the Commission.6 4 See Order Appointing Tax Administrator, Exchange Act Rel. No. 99468 (Feb. 5, 2024). See Omnibus Order Directing the Engagement of Two Tax Administrators for Appointment on a Case-By-Case Basis in Administrative Proceedings that Establish Distribution Funds, Exchange Act Rel. No. 94845 (May 4, 2022). 6 6 31. The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section 468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and will satisfy the tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not limited to: (a) Obtaining a taxpayer identification number; (b) Requesting funds necessary for the timely payment of all applicable taxes, the payment of taxes for which the Tax Administrator has received funds, and the filing of applicable returns; and (c) Fulfilling any information reporting or withholding requirements required for distributions from the Fair Fund. 32. All tax obligations will be paid from the Fair Fund, subject to the review and approval of Commission staff. V. FUND ADMINISTRATOR 33. On February 12, 2024, the Commission appointed KCC Class Action Services, LLC as the fund administrator for the Fair Fund (the “Fund Administrator”) and the Fund Administrator has obtained a bond in the amount of $45,425,000, as ordered.7 Pursuant to Rule 1105(a) of the Commission’s Rules, 17 C.F.R. § 201.1105(a), the Fund Administrator may be removed at any time by order of the Commission or hearing officer. 34. The Fund Administrator will be responsible for administering the Fair Fund in accordance with the Plan. This will include, among other things, taking reasonable steps to identify and contact Preliminary Claimants; obtaining mailing information for Preliminary Claimants; establishing a website and staffing a call center to address inquiries during the claims process; developing a claims database; preparing accountings; cooperating with the tax administrator appointed by the Commission to satisfy any tax liabilities and to ensure compliance with income tax reporting requirements, including but not limited to Foreign Account Tax Compliance Act (FATCA); advising Preliminary Claimants of deficiencies in claims and providing an opportunity to cure any documentary defects; taking antifraud measures, such as identifying false, ineligible and overstated claims; making determinations under the criteria established herein as to Preliminary Claimants’ eligibility; advising Preliminary Claimants of final claim determinations; disbursing the Fair Fund in accordance with this Plan, as ordered by the Commission; and researching and reconciling errors and reissuing payments, when possible. 35. To carry out the purposes of this Plan, the Fund Administrator is authorized to make and implement immaterial changes to the Plan upon agreement of the Commission staff. If 7 See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 99468 (Feb. 12, 2024). 7 a change is deemed to be material by the Commission staff, Commission approval is required prior to implementation by amending the Plan. 36. The Fund Administrator may extend any procedural deadline contained in the Plan for good cause shown, if agreed upon by the Commission staff. 37. The Fund Administrator is authorized to enter into agreements with third parties as may be appropriate or necessary in the administration of the Fair Fund, provided such third parties are not excluded pursuant to other provisions of this Plan. In connection with such agreements, the third parties will be deemed to be agents of the Fund Administrator under this Plan. 38. The Fund Administrator will be entitled to payment from the Fair Fund of reasonable fees and expenses, including the bond premium, incurred in the performance of its duties (including any such fees and expenses incurred by agents, consultants or third parties retained by the Fund Administrator in furtherance of its duties). VI. ADMINISTRATION OF THE FAIR FUND Identification of and Notification to Preliminary Claimants 39. The Fund Administrator will, insofar as practicable, use its best efforts to identify Preliminary Claimants from a review of trading records, obtaining records from registered broker-dealers and investment advisors, and seeking information from any other source available to it. The Fund Administrator may also engage a third-party firm, after consultation with and approval of the Commission staff, to assist in identifying Preliminary Claimants to maximize the participation rate in the Fair Fund. 40. Within sixty (60) days after Commission approval of the Plan, the Fund Administrator will: (a) design and submit the Plan Notice and the Claim Form to the Commission staff for review and approval; (b) create a mailing and claim database of all Preliminary Claimants based upon information identified by the Fund Administrator; (c) run a National Change of Address search to retrieve updated addresses for all records in the database, thereby ensuring the mailing information for Preliminary Claimants is up-to-date; (d) email and/or mail a Plan Notice to each Preliminary Claimant identified by the Fund Administrator and to the Fund Administrator’s list of banks, brokers, and other nominees in accordance with paragraph 45 below; (e) establish and maintain a website devoted solely to the Fair Fund. The Fair 8 Fund’s website will make available a copy of the approved Plan; provide information regarding the claims process and eligibility requirements for participation in the Fair Fund in the form of frequently asked questions; include in downloadable form, the Claim Form and other related materials; an online portal through which claims may be submitted; and such other information the Fund Administrator believes will be beneficial to Preliminary Claimants; (f) establish and maintain a toll-free telephone number for Preliminary Claimants to call to speak to a live representative of the Fund Administrator during its regular business hours or, outside of such hours, to hear prerecorded information about the Fair Fund. The toll-free number will be listed on all correspondence from the Fund Administrator to Preliminary Claimants as well as on the Fair Fund’s website; and (g) establish and maintain a traditional mailing address and an email address which will be listed on all correspondence from the Fund Administrator to Preliminary Claimants as well as on the Fair Fund’s website. 41. The Fund Administrator will publish the Summary Notice electronically within ten (10) days of the initial mailing of the Plan Notice 42. The Commission staff retains the right to review and approve any material posted on the Fair Fund’s website, any material mailed, and any scripts used in connection with any communication with Preliminary Claimants. 43. In all materials that refer to the Claims Bar Date, the filing deadline will be clearly identified with the calendar date, which is ninety (90) days from the date of the initial mailing of the Plan Notice. 44. The Fund Administrator will promptly provide a Plan Notice and/or Claim Form to any Preliminary Claimant upon request made via mail, phone, or email prior to the Claims Bar Date. 45. The Fund Administrator will send by mail, email, or other means, the Plan Notice to the Fund Administrator’s list of banks, brokers, and other nominees, as well as any other institutions identified during the outreach process, that may have records of the Securities during the Relevant Period (collectively, the “Nominees or Custodians”). The Fund Administrator will request that these entities, to the extent that they were record holders for beneficial owners of the Securities: (a) within fourteen (14) days of the Nominees’ or Custodians’ receipt of the Plan Notice, notify and send the Plan Notice to the respective beneficial owner and as requested, provide to the beneficial owners a Claim Form, so that the beneficial owners may timely file a claim. The burden will be on the Nominees or Custodians to ensure the claims process information, 9 including, if requested, the Claims Form and other relevant materials, is properly disseminated to the beneficial owners; and/or (b) provide to the Fund Administrator, within fourteen (14) days of receipt of the Plan Notice, a list of last known names and addresses for all beneficial owners for whom/which they held, as the record holder, the Securities during the Relevant Period, so that the Fund Administrator can communicate with the beneficial owners directly. 46. An unlimited number of Plan Notices and Claim Forms may be downloaded by Nominees or Custodians. In the event paper copies are needed, the Fund Administrator will provide no more than fifty (50) additional copies of the materials relevant to submitting a claim to any Nominee or Custodian requesting it for the purpose of distribution to beneficial owners. 47. Documented reasonable out-of-pocket expenses incurred by the Nominees or the Custodians, which would not have been incurred but for compliance with paragraph 45 above, will be reimbursed from the Fair Fund. The amount of such expenses allowed will be at the discretion of the Fund Administrator, in consultation with the Commission staff. Unless otherwise determined by the Fund Administrator in consultation with the Commission staff, outof-pocket expenses based on the following rates will be considered reasonable: (a) a maximum of $0.03 per Plan Notice and/or Claim Form, plus postage at the pre-sort postage rate per Plan Notice and/or Claim Form actually mailed; (b) a maximum of $0.05 per email of the Plan Notice with a link to the Claim Form; or (c) $0.20 per name, address, and email address provided to the Fund Administrator, up to a maximum of amount of $1,500.00. 48. The Fund Administrator will attempt to locate any Preliminary Claimant whose mailing is returned as “undeliverable” and will document all such efforts. The Fund Administrator will use its best efforts to make use of commercially available resources and other reasonably appropriate means to obtain updated addresses in response to “undeliverable” notices and forward any returned mail for which an updated address is provided or obtained. The Fund Administrator will make available, upon request by the Commission staff, a list of all Preliminary Claimants whose Plan Notices have been returned as “undeliverable” due to incorrect addresses and for which the Fund Administrator has been unable to locate current addresses. Filing a Claim 49. To avoid being barred from asserting a claim, on or before the Claims Bar Date, each Preliminary Claimant must submit to the Fund Administrator a properly completed Claim Form reflecting such Preliminary Claimant’s claim, together with all required supporting 10 documentation as the Fund Administrator, in its discretion, deems necessary or appropriate to substantiate the claim. Without limitation, this information may include third party documentary evidence of purchases and dispositions of Securities during the Relevant Period, as well as holdings of Securities at pertinent dates. 50. Electronic claim submission is encouraged; the Plan Notice will include instructions on how Preliminary Claimants can submit their claims electronically via the Fair Fund’s website. If using the web-based claim filing option, a Preliminary Claimant must submit his, her, or its claim to the Fund Administrator by 11:59 p.m. on the Claims Bar Date. The Plan Notice will also include instructions for submission of claims if the Preliminary Claimant is unable to submit his, her, or its claim electronically. 51. The burden will be upon the Preliminary Claimant to ensure that his, her or its Claim Form has been properly and timely received by the Fund Administrator. A Claim Form that is postmarked or otherwise received after the Claims Bar Date will not be accepted unless the deadline is extended by the Fund Administrator for good cause shown, after consultation with the Commission staff. 52. All Claim Forms and supporting documentation necessary to determine a Preliminary Claimant’s eligibility to receive a distribution from the Fair Fund under the terms of the Plan must be endorsed by a declaration executed by the Preliminary Claimant under penalty of perjury under the laws of the United States. The declaration must be executed by the Preliminary Claimant, unless the Fund Administrator accepts such declaration from a Person authorized to act on the Preliminary Claimant’s behalf, whose authority is supported by such documentary evidence as the Fund Administrator deems necessary. 53. When submitting claims to the Fair Fund on behalf of its clients, all Third-Party Filers must use the electronic filing template provided by the Fund Administrator in this matter. Third-Party Filers that do not comply with the template and format provided by the Fund Administrator may be rejected. Third-Party Filers must also submit a signed master proof of claim and release, as well as proof of authority to file on behalf of the claimant(s) at the time the electronic file of transactions is submitted. Failure to do so may result in rejection of the claim. 54. Each Third-Party Filer must establish the validity and amount of each claim in its submission. Third-Party Filers must submit such supporting documentary evidence of purchases, dispositions, and holdings of Securities as the Fund Administrator deems necessary or appropriate to substantiate each individual claim. Without limitation, this includes the complete name of the Preliminary Claimant (beneficial account owner) and its TIN (for individuals) or EIN (for companies), sufficient contact information to confirm the identity of the beneficial owner, and documentation from the original bank, broker or other institution of purchases and dispositions of Securities (account statements, confirmations and other documentation of purchases and dispositions), as well as holdings of the Securities on pertinent dates. The Fund Administrator will have the right to request, and the Third-Party Filer will have the burden of providing to the Fund Administrator, any additional information and/or documentation deemed necessary by the Fund Administrator to substantiate the claim(s) contained in the submission. Documentation from a Third-Party Filer that is not acceptable to the Fund Administrator will 11 result in the rejection of the affected claim(s). The determination of the Fund Administrator to reject a claim for insufficient documentation, as reflected in the Determination Notice, is final and within the discretion of the Fund Administrator. 55. The receipt of Securities by gift, inheritance, devise, or operation of law will not be deemed to be a purchase of Securities, nor will it be deemed an assignment of any claim relating to the purchase of such Securities unless specifically so provided in the instrument of inheritance. The recipient of Securities as a gift, inheritance, devise or by operation of law will be eligible to file a Claim Form and participate in the distribution of the Fair Fund to the extent the original purchaser would have been eligible under the terms of the Plan. Only one claim may be submitted for the same transactions in Securities, and in cases where duplicative claims are filed by the donor and donee, the donee claim will be honored, assuming it is supported by proper documentation. 56. Claims on behalf of a retirement plan covered by Section 3(3) of ERISA, 29 U.S.C.§ 1002(3), which do not include Individual Retirement Accounts and such plan’s participants, are properly made by the administrator, custodian or fiduciary of the plan and not by the plan’s participants. The Fund Administrator will distribute any payments on such claims directly to the administrator, custodian or fiduciary of the retirement plan. The custodian or fiduciary of the retirement plan will distribute any payments received in a manner consistent with its fiduciary duties and the governing account or plan provisions. 57. The Preliminary Claimant has the burden of notifying the Fund Administrator of a change in his, her or its current address and other contact information, and ensuring that such information is properly reflected on the Fund Administrator's records. Review of Claims and Deficiency Process 58. The Fund Administrator will review all claim submissions and determine the eligibility of each Preliminary Claimant to participate in the Fair Fund by reviewing claim data and supporting documentation (or the lack thereof) and verifying the claim. Each Preliminary Claimant will have the burden of proof to establish the validity and amount of his, her or its claim. The Fund Administrator will have the right to request, and the Preliminary Claimant will have the burden of providing to the Fund Administrator, any additional information and/or documentation deemed relevant by the Fund Administrator. 59. The Fund Administrator will provide a Claim Status Notice within ninety (90) days of the Claims Bar Date to each Preliminary Claimant who has filed a deficient Claim Form with the Fund Administrator. The Claim Status Notice will provide to each Preliminary Claimant whose claim is deficient, in whole or in part, the reason(s) for the deficiency (e.g., failure to provide required information or documentation). In the event the claim is denied, in whole or in part, the Claim Status Notice will state the reason(s) for such denial. The Claim Status Notice will also notify the Preliminary Claimant of the opportunity to cure any deficiency, request reconsideration, or dispute the determination made by the Fund Administrator and provide instructions regarding what is required to do so. 12 60. Any Preliminary Claimant with a deficient claim will have thirty (30) days from the date of the Claim Status Notice to cure any deficiencies identified in the Claim Status Notice. 61. Any Preliminary Claimant seeking reconsideration of a denied claim must advise the Fund Administrator in writing within thirty (30) days of the date of the Claim Status Notice. All requests for reconsideration must include the necessary documentation to substantiate the basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim. 62. The Fund Administrator will have the authority, in its sole discretion, to waive technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims. Claims Eligibility Determination 63. Within two hundred forty (240) days of the Claims Bar Date, the Fund Administrator will complete all claims determinations and send a Determination Notice to all Preliminary Claimants who timely submitted a Claim Form notifying the Preliminary Claimant of its eligibility determination. The Determination Notice will further provide to each Preliminary Claimant that is determined to be an Eligible Claimant with his, her, or its calculated Recognized Loss. The Determination Notice will constitute the Fund Administrator’s final ruling regarding the eligibility status of the claim. 64. The Fund Administrator may consider disputes of an Eligible Claimant’s Recognized Loss calculation if notice of the dispute is presented in writing to the Fund Administrator within thirty (30) days of the date of the Determination Notice. The Fund Administrator will consult with Commission staff as appropriate. Within thirty (30) days of receiving an Eligible Claimant’s notice of dispute, the Fund Administrator will notify the Eligible Claimant, in writing, of its calculation of the Eligible Claimant’s Recognized Loss after considering the dispute. This notice will constitute the Fund Administrator’s final ruling regarding the loss calculations for the claim. Third Party Review 65. After the Fund Administrator has completed the process of analyzing the claims and determining claim amounts in accordance with the Plan, and prior to the distribution of any funds, the Fund Administrator will engage an independent, third-party firm, not unacceptable to Commission staff, to perform a set of agreed upon procedures, review a statistically significant sample of claims, and ensure accurate and comprehensive application of the Plan of Allocation. The Fund Administrator will communicate the results of the review to Commission staff together with any written analysis or reports related to the review, and, upon request, will make the firm available to the Commission staff to respond to questions concerning the review. Distribution Methodology 66. Any Preliminary Claimant, who is not an Excluded Party, who submitted a valid Claim Form and has suffered a Recognized Loss, as calculated in accordance with the Plan of Allocation, will be deemed an Eligible Claimant. 13 67. No Distribution Payments will be made for less than $10.00. If an Eligible Claimant’s Recognized Loss, in accordance with the Plan of Allocation, calculates to a distribution amount less than $10.00, that Eligible Claimant will be deemed ineligible to receive a Distribution Payment and his, her, or its distribution amount will be reallocated on a pro rata basis to Eligible Claimants whose distribution amounts are greater than or equal to $10.00. All Eligible Claimants whose Recognized Loss calculates to a distribution amount equal to or greater than $10.00 will be deemed a Payee and receive a Distribution Payment. Establishment of a Reserve 68. Before determining the amount of funds available for distribution and calculating each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax Administrator, will establish a reserve to pay Administrative Costs and to accommodate any unexpected expenditures (the “Reserve”). 69. After all disbursements and Administrative Costs are paid, any remaining amounts in the Reserve will become part of the Residual described in paragraph 91 below. Preparation of the Payment File 70. Within sixty (60) days following the date of the Determination Notices described above, paragraph 63, the Fund Administrator will compile and send to the Commission staff the Payee information, including the name, address, calculated Recognized Loss, and the amount of the Distribution Payment for all Payees (the “Payee List”). The Fund Administrator will also provide a Reasonable Assurances Letter to the Commission staff, representing that the Payee List: (a) was compiled in accordance with the approved Plan; (b) is accurate as to Payees’ names, addresses, Recognized Losses and amounts of their Distribution Payment; (c) includes the number of Payees compensated; (d) the percentage of the Payee’s Recognized Loss being compensated by the disbursement from the Fair Fund, and if applicable, the total percentage to include all prior disbursements; (e) the total amount of funds to be disbursed; and (f) provides all information necessary to make a payment to each Payee. The Escrow Account 71. Prior to the disbursement of funds from the Net Available Fair Fund, the Fund Administrator will establish an escrow account (the “Escrow Account”) with a United States commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve Act, Subpart D, 12 C.F.R. 208.43 and that is not unacceptable to the Commission staff (the “Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by Commission staff. 72. The Fund Administrator, pursuant to the Escrow Agreement, will also establish with the Bank a separate deposit account (e.g., controlled distribution account, managed distribution account, linked checking and investment account) (the “Distribution Account”), insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass through limit. The Distribution Account will be linked with the Escrow Account and will be 14 named, and records maintained, in accordance with the Escrow Agreement. 73. During the term of the Escrow Agreement, the portions of the Fair Fund transferred to the Escrow Account (the “Escrow Property”), will be invested and reinvested in short-term U.S. Treasury securities backed by the full faith and credit of the United States Government or an agency thereof. The investment will be, of a type and term necessary to meet the cash liquidity requirements for payments to Payees, tax obligations, and/or fees of the Tax Administrator and/or Fund Administrator, including investment or reinvestment in a bank account insured by the FDIC up to the guaranteed FDIC limit, or in money market mutual funds registered under the Investment Company Act of 1940 that invest 100% of their assets in direct obligations of the United States Government. 74. The Fund Administrator will provide duplicate original bank and/or investment statements on any accounts established by the Fund Administrator to the Tax Administrator on a monthly basis and will assist the Tax Administrator in obtaining mid-cycle statements, as necessary. 75. The Fund Administrator will deposit or invest funds in the Escrow and Distribution Accounts so as to result in the maximum reasonable net return, taking into account the safety of such deposits or investments. In consultation with Commission staff, the Fund Administrator will work with the Bank on an ongoing basis to determine an allocation of funds between the Escrow and Distribution Account. 76. All interest, dividends, and/or income earned by the Escrow Property will accrue for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and Distribution Accounts will be the responsibility of the Fund Administrator, who may be reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to the Bank, its agents, and/or its affiliates from the Escrow Property. Distribution of the Fair Fund 77. The Fund Administrator will seek to distribute the Net Available Fair Fund to all Payees only after all Claim Forms have been processed and all Preliminary Claimants whose claims have been rejected or disallowed, in whole or in part, have been notified and provided the opportunity to contest or cure pursuant to the procedures set forth herein. 78. Upon the Commission’s staff’s receipt, review, and acceptance of the Payee List and Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek an Order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17 C.F.R. § 210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank in accordance with the Payee List for distribution by the Fund Administrator in accordance with the Plan. All disbursements will be made pursuant to a Commission Order. 79. Upon issuance of an Order to disburse, the Commission staff will direct the transfer of funds in accordance with the Payee List to the Bank. The Fund Administrator will then use its best efforts to commence mailing Distribution Payment checks and/or effect wire transfers 15 within ten (10) business days of the release of the funds into the Escrow Account. All efforts will be coordinated to limit the time between the Escrow Account’s receipt of the funds and the issuance of Distribution Payments. 80. All Distribution Payments will be issued by the Fund Administrator from the Distribution Account. All checks will bear a stale date of one hundred twenty (120) days from the date of issuance. Checks that are not negotiated by the stale date will be voided, and the Bank will be instructed to stop payment on those checks. A Payee’s claim will be extinguished if he, she, or it fails to negotiate his, her or its check by the stale date, and the funds will remain in the Fair Fund, except if a check reissue has been requested before the stale date, such request is governed by paragraph 87. 81. All Distribution Payments will be preceded or accompanied by a communication that includes, as appropriate: (a) a statement characterizing the distribution; (b) a statement that the tax treatment of the distribution is the responsibility of each Payee and that the Payee should consult his, her or its tax advisor for advice regarding the tax treatment of the distribution; (c) a statement that checks will be void and cannot be reissued after one hundred twenty (120) days from the date the original check was issued; and (d) contact information for the Fund Administrator for questions regarding the Distribution Payment. The letter or other mailings to Payees characterizing a Distribution Payment will be submitted to the Tax Administrator and Commission staff for review and approval. 82. All Distribution Payments, either on their face or in the accompanying mailing, will clearly indicate that the money is being distributed from the Fair Fund established by the Commission to compensate investors for harm from securities law violations. 83. Distribution Payments must be made by check or electronic payment payable to the Payee (the beneficial account owner). A Third-Party Filer will not be the payee of any Distribution Payment check or electronic Distribution Payment. Compensation to a Third-Party Filer for its services may not be paid or deducted from the Distribution Payment. 84. The submission of a Claim Form and the receipt and acceptance of a Distribution Payment by a Payee is not intended to be a release of a Payee’s rights and claims against any party. 85. At the discretion of the Fund Administrator, certain costs that were not factored into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s Distribution Payment. In such situations, the Fund Administrator will immediately notify the Tax Administrator of the reduction in the Distribution Payment. Post Distribution; Handling of Returned or Uncashed Checks; and Reissues 86. The Fund Administrator will use its best efforts to make use of commercially available resources and other reasonably appropriate means to locate all Payees whose checks are returned to the Fund Administrator as “undeliverable.” If new address information becomes available, the Fund Administrator will repackage the distribution check and send it to the new 16 address. If new address information is not available after a diligent search (and in no event no later than one hundred twenty (120) days after the initial mailing of the original check) or if the distribution check is returned again, the check will be voided, and the Fund Administrator will instruct the issuing financial institution to stop payment on such check. If the Fund Administrator is unable to find a Payee’s correct address, the Fund Administrator, in its discretion, may remove such Payee from the distribution and the allocated Distribution Payment will remain in the Fair Fund for distribution, if feasible, to the remaining Payees. 87. The Fund Administrator will reissue checks to Payees upon the receipt of a valid, written request from the Payee prior to the initial stale date. In cases where a Payee is unable to endorse a Distribution Payment check as written (e.g., name changes, IRA custodian changes, or recipient is deceased) and the Payee or a lawful representative requests the reissuance of a Distribution Payment check in a different name, the Fund Administrator will request, and must receive, documentation to support the requested change. The Fund Administrator will review the documentation to determine the authenticity and propriety of the change request. If, in the discretion of the Fund Administrator, such change request is properly documented, the Fund Administrator will issue an appropriately redrawn Distribution Payment to the requesting party. Reissued checks will be void at the later of one hundred twenty (120) days from issuance of the original check or ninety (90) days from the reissuance, and in no event will a check be reissued after one hundred twenty (120) days from the date of the original issuance without the approval of Commission staff. 88. The Fund Administrator will make reasonable efforts to contact Payees who have failed to negotiate their Distribution Payment check and take appropriate action to follow up on the status of uncashed checks at the request of Commission staff. The Fund Administrator may reissue such checks subject to the time limits detailed herein. If a Distribution Payment remains uncashed after the stale date the Fund Administrator will instruct the Bank to issue a stop payment on the check. The Fund Administrator, in its discretion, may remove such Payee from the distribution, and the allocated Distribution Payment will remain in the Fair Fund for distribution, if feasible, to the remaining Payees. Administrative Costs 89. All Administrative Costs will be paid from the Fair Fund in accordance with the Commission’s Rules. Upon completion of the final distribution, the Fund Administrator will make arrangements, in consultation with the Commission staff, for the final payment of all Administrative Costs. Disposition of Undistributed Funds 90. If funds remain following the initial distribution, the Fund Administrator, in consultation with the Commission staff, may seek subsequent distribution of any remaining funds, pursuant to the Commission’s Rules. 91. A residual will be established for any amounts remaining after the final disbursement to Payees from the Fair Fund (the “Residual”). The Residual may include funds 17 from, among other things, amounts remaining the Reserve, distribution checks that have not been cashed, checks or electronic payments that were not delivered or were returned to the Commission, and tax refunds received due to the Fair Fund’s overpayment of taxes or for waiver of IRS penalties. 92. Once the Fund Administrator, in consultation with the Commission staff, deems further distribution of the Fair Fund to investors infeasible, the Fund Administrator will direct the Bank to stop payment on all uncashed distribution payments, and return any funds remaining in the Escrow and Distribution Accounts to the Commission to become part of the Residual. 93. All funds remaining in the Residual that are infeasible to distribute to investors will be returned to the Commission and transferred to the U.S. Treasury after the final accounting is approved by the Commission. Filing of Reports and Accountings 94. In accordance with Rule 1105(f) of the Commission’s Rules, the Fund Administrator will provide to the Commission staff a progress report and a quarterly account statement in a format to be provided by Commission staff, within forty-five (45) days of the Commission’s approval of the Plan and will provide to Commission staff additional reports and quarterly account statements within ten (10) days after the end of every calendar quarter. Such progress reports will inform the Commission staff of the activities and status of the Fair Fund during the reporting period, and will specify, at a minimum, the location of the account(s) comprising the Fair Fund, including among other things, an interim accounting of all monies in the Fair Fund. 95. When the final distribution is completed, the Fund Administrator will provide to Commission staff a final report summarizing all tasks undertaken and the outcome of its administrative efforts. The Fund Administrator will make arrangement for the final payment of all Administrative Costs, and submit a final accounting of all monies received, earned, spent, and distributed in connection with the administration of the Plan in a format provided by the Commission staff. The Fund Administrator will also submit a report to the Commission staff containing the final distribution statistics regarding distributions to individuals and entities, and such other information requested by the Commission staff. Miscellaneous 96. When administering this Plan, the Fund Administrator, and/or each of its designees, agents, and assigns, may rely on all applicable laws; orders issued by the Commission, including orders issued by delegated authority; orders issued by an administrative law judge, if any, appointed in this proceeding; and any records, including records containing investor information, provided by Commission staff. 97. Should any additional funds be received pursuant to Commission or Court order, agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the 18 Commission’s Rules. Wind-down and Document Retention 98. The Fund Administrator will shut down the website, P.O. Box and customer service telephone line(s) established specifically for the administration of the Fair Fund six (6) months after the transfer of any remaining funds to the Commission, or at such earlier time as the Fund Administrator determines with the concurrence of the Commission staff. 99. The Fund Administrator will retain all materials submitted by Preliminary Claimants in either paper or electronic form for a period of six (6) years from the date of approval of a final fund accounting. Materials maintained in electronic form must be accessible and readable for the duration of retention. Pursuant to the Commission staff's direction, the Fund Administrator will either turn over to the Commission or destroy all materials, including documents in any media, upon expiration of this period. Termination of the Fair Fund 100. Once the Commission has approved the final accounting, the Commission staff will seek an order from the Commission authorizing: (a) the transfer of any amounts remaining in the Fair Fund that is infeasible to return to investors, and any amounts returned to the Fair Fund in the future that is infeasible to return to investors, to the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; (c) cancellation of the Fund Administrator’s bond; and (d) termination of the Fair Fund. 101. The Fair Fund will be eligible for termination and the Fund Administrator will be eligible for discharge after all of the following have occurred (a) a final accounting, in a standard accounting format provided by the Commission staff, has been submitted by the Fund Administrator and approved by the Commission; (b) all Administrative Costs have been paid; and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer to U.S. Treasury. 102. Once the Fair Fund has been terminated and funds, if any, are transferred to the U.S. Treasury, no further claims will be allowed and no additional payments will be made whatsoever. VII. NOTICE AND COMMENT PERIOD 103. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the “Notice”) will be published on the Commission’s website at http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan must do so in writing by submitting their comments to the Commission within thirty (30) days of the publication of the Notice: (a) to the Office of the Secretary, United States Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (b) by using the Commission’s Internet comment form (www.sec.gov/litigation/admin.shtml); or (c) by sending an email to rule-comments@sec.gov. Comments submitted by email or via the Commission’s 19 website should include “Administrative Proceeding File Numbers 3-19899, 3-19900, 3-19901, and 3-19902” in the subject line. Comments received will be available to the public. Persons should only submit comments that they wish to make publicly available. 20 Exhibit A PLAN OF ALLOCATION This Plan of Allocation1 is designed to compensate investors based on their losses, due to the misconduct of the Respondent, on (1) shares of Valeant Pharmaceuticals International, Inc. common stock purchased on October 20, 2014 through April 28, 2016, inclusive (the “Stock Relevant Period”) and (2) Valeant Pharmaceuticals International, Inc. bonds2 purchased on October 20, 2014 through October 29, 2015, inclusive (the “Bond Relevant Period”).3 Investors who did not purchase shares of Valeant Pharmaceuticals International, Inc. common stock or bonds (the “Securities”) during the respective Relevant Periods, or who are an Excluded Party, are ineligible to recover under this Plan. Artificial inflation in the prices of the Securities over various date ranges surrounding corrective disclosures and average closing prices of the Securities have been calculated by Commission staff economists. Artificial share price inflation and the average closing price for common stock are reflected below in Tables A and B, respectively. Artificial bond price inflation and the average closing prices for bonds are reflected in Tables C and Table D, respectively. I. The Methodology The Fund Administrator will calculate the amount of loss (“Recognized Loss per Share” and “Recognized Loss per $100 Par Value”) as follows: Common Stock For each share of Valeant Pharmaceuticals International, Inc. common stock purchased during the Stock Relevant Period and 1 A. Sold prior to October 21, 2015,4 the Recognized Loss per Share is $0.00. B. Sold on or after October 21, 2015, and prior to the close of trading on April 28, 2016, the Recognized Loss per Share is the lesser of: i. the amount of inflation per share on the purchase/acquisition date as set forth in Table A minus the amount of inflation per share on the sale date as set forth in Table A; or ii. the purchase/acquisition price minus the sale price. All capitalized terms used herein but not defined have the same meanings ascribed to them in the Plan. The bonds listed in Table C are the only bonds eligible for recovery under this Plan. 3 The Stock Relevant Period is longer than the Bond Relevant Period because Valeant’s common stock price was affected by an additional misstatement that did not affect bond prices. 4 On October 21, 2015, Valeant’s share price fell 19.2% after Citron Research published a report suggesting Valeant used a secretive relationship with Philidor to record fictitious sales. 2 C. D. Sold after the close of trading on April 28, 2016 and prior to the close of trading on July 27, 2016 (i.e., during the “Stock Lookback Period”), the Recognized Loss per Share is the least of: i. the amount of inflation per share on the purchase/acquisition date as set forth in Table A; or ii. the purchase/acquisition price minus the sale price; or iii. the purchase/acquisition price minus the moving average closing share price of the common stock on the sale date as set forth in Table B. Held as of the close of trading on July 27, 2016, the last day of the Stock Lookback Period, the Recognized Loss per Share is the lesser of: i. the amount of inflation per share on the purchase/acquisition date as set forth in Table A; or ii. the purchase/acquisition price minus $25.26, the average closing share price of the common stock during the Stock Lookback Period, as shown in the last row in Table B. If the Recognized Loss per Share calculates to a negative number, reflecting a gain, the Recognized Loss per Share will be $0.00. Bonds For each $100 par value of eligible Valeant Pharmaceuticals International, Inc. bonds purchased during the Bond Relevant Period and A. B. Sold prior to the close of trading on October 29, 2015, the Recognized Loss per $100 Par Value5 is the lesser of: i. the amount of inflation per $100 par value on the purchase/acquisition date as set forth in Table C minus the amount of inflation per $100 par value on the sale date as set forth in Table C; or ii. the purchase/acquisition price minus the sale price. Sold after the close of trading on October 29, 2015 and prior to the close of trading on January 27, 2016 (i.e., during the “Bond Lookback Period”), the Recognized Loss per $100 Par Value is the least of: i. the amount of inflation per $100 par value on the purchase/acquisition date as 5 CUSIPs EK8066186 and EK7990790 are denominated in EUR. For those bonds, the phrase per $100 par value should be read as per 100 EUR par value. 2 set forth in Table C; or C. ii. the purchase/acquisition price minus the sale price; or iii. the purchase/acquisition price minus the moving average closing price of the bond on the sale date as set forth in Table D. Held as of the close of trading on January 27, 2016, the last day of the Bond Lookback Period, the Recognized Loss per $100 Par Value is the lesser of: i. the amount of inflation per $100 par value on the purchase/acquisition date as set forth in Table C; or ii. the purchase/acquisition price minus the average closing price of the bond during the Bond Lookback Period, as shown in the last row in Table D. If the Recognized Loss per $100 Par Value calculates to a negative number, reflecting a gain, the Recognized Loss per $100 Par Value will be $0.00. All prices mentioned in the calculations exclude all taxes, fees, commissions, mark-ups, and mark-downs. Bond prices mentioned in the calculations also exclude accrued interest from coupon payments (i.e., bond prices are “clean” prices). Purchases/acquisitions and sales will be deemed to have occurred on the “contract” or “trade” date as opposed to the “settlement” or “payment” date. Recognized Loss calculated in a currency other than U.S. dollars will be converted to U.S. dollars using the exchange rate as of 8:00 PM Eastern Daylight Time on July 27, 2016. II. Additional Provisions A. FIFO Methodology Multiple purchases and sales of Securities during their respective Relevant Periods will be matched to transactions in the same Security according to the first-in, first-out (“FIFO”) method. For each Security separately, the earliest sales during the respective Relevant Period will be matched first against any holdings at the opening of the respective Relevant Period. Once the beginning holdings all have been matched, or in the event that there are no beginning holdings, then any further sales will be matched against the earliest purchases in the respective Relevant Period and chronologically thereafter. B. Acquisitions The receipt or grant of the Securities by gift, devise, inheritance, or operation of law during the respective Relevant Periods is not considered an eligible purchase if the original purchase did not occur during the respective Relevant Period. Securities acquired outside their respective Relevant Period will be excluded from the calculation of the Recognized Loss. 3 C. Options and Derivatives Valeant Pharmaceuticals International, Inc. common stock and the Valeant Pharmaceuticals International, Inc. bonds listed in Tables C and D are the only securities eligible for recovery under this Plan. Option contracts to purchase or sell the Securities are not eligible for recovery under the Plan. With respect to the Securities purchased or sold through the exercise of an option, the purchase/sale date is the options’ exercise or assignment date, and the purchase/sale price is the option’s strike price at the time of exercise or assignment. Transactions in the Securities during the respective Relevant Periods that are pursuant to, or in connection with, a swap or another derivative will not be eligible for a recovery and will be excluded from the calculation of the Recognized Loss. D. Short Sales Shares purchased during the Stock Relevant Period to cover short positions held at the beginning of the Stock Relevant Period or to cover short positions opened during the Stock Relevant Period will have a Recognized Loss per Share of $0.00. Bonds purchased during the Bond Relevant Period to cover short positions held at the beginning of the Bond Relevant Period or to cover short positions opened during the Bond Relevant Period will have a Recognized Loss per $100 Par Value of $0.00. The date of a “short sale” is deemed to be the date of sale of the Securities and the date of covering a short sale is deemed to be the date of purchase of the Securities. The earliest purchases during the respective Relevant Period will be matched against any short position existing at the opening of that Relevant Period until that short position is fully covered. III. Calculating Recognized Loss Recognized Loss for common stock will be the sum of the Recognized Loss per Share, as calculated above, on all shares of the Security purchased or acquired during the Stock Relevant Period. If the Recognized Loss for common stock calculates to a negative number, reflecting a gain, then the Recognized Loss for common stock will be $0.00. Recognized Loss for each bond will be the sum of the Recognized Loss per $100 Par Value, as calculated above, for all par value of that bond purchased or acquired during the Bond Relevant Period. If the Recognized Loss for any bond calculates to a negative number, reflecting a gain, then the Recognized Loss for that bond will be $0.00. The Recognized Loss for each Security is subject to the “Market Loss Limitation” provision below. If a Preliminary Claimant transacted in more than one Security, the Recognized Loss will be the sum of the Recognized Losses for each Security, after their respective applications of the Market Loss Limitation. 4 A. Market Loss Limitation For each Security separately, the Recognized Loss may be limited to actual market loss. If a Preliminary Claimant’s actual market loss on purchases of a Security during the Security’s Relevant Period is less than his, her or its Recognized Loss for that Security, then the Recognized Loss for that Security will be limited to the actual market loss amount of that Security. If the actual market loss of that Security calculates to a gain, then the Recognized Loss for that Security will be $0.00. The actual market loss will be calculated as (a) the total purchase amount for shares or par value of the Security purchased during the Security’s Relevant Period,6 less the sum of (b) the sales proceeds from shares or par value of the Security purchased during the Security’s Relevant Period and sold during the Security’s Relevant Period or during the Security’s Lookback Period,7 and (c) the holding value on the remaining of those shares or par value purchased during the Security’s Relevant Period, which for the purposes of this calculation will be the average closing price of the Security during the Security’s Lookback Period, as shown on the last row in Table B or Table D.8 IV. Becoming An Eligible Claimant A Preliminary Claimant, who is not an Excluded Party, who submits a valid Claim Form and has suffered a Recognized Loss, as calculated above, will be deemed an Eligible Claimant. V. Allocation of Funds If the Net Available Distribution Fund is equal to or exceeds the sum of Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will equal his, her, or its Recognized Loss, plus any “Reasonable Interest” awarded. If the Net Available Distribution Fund is less than the sum of the Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will equal his, her or its “Pro Rata Percentage” of the Net Available Distribution Fund. In either case, the distribution amount will be subject to the “Offset for Prior Recovery” and “Minimum Distribution Amount.” A. Calculating an Eligible Claimant’s Pro Rata Percentage This computation is intended to measure Eligible Claimants’ Recognized Losses against one another. Each Eligible Claimant’s Pro Rata Percentage will be calculated for each Eligible Purchases during the Security’s Relevant Period to cover short positions will be included in the calculation of actual market loss if the purchase is matched to a short sale during the Security’s Relevant Period. Purchases/acquisitions that are not eligible for recovery will not be considered for purposes of calculating the actual market loss. 7 Sales of the Security during the Security’s Relevant Period will be matched first against the opening position and the proceeds of such sales will not be considered for purposes of calculating the actual market loss. Short sales will be considered for purposes of calculating the actual market loss. 8 Any open short positions at the end of the Security’s Lookback Period will be ignored for purposes of calculating the actual market loss. 6 5 Claimant as the ratio of his, her, or its Recognized Loss to the sum of Recognized Losses of all Eligible Claimants. B. Offset for Prior Recovery To avoid payment of a windfall, an Eligible Claimant’s distribution amount will be no larger than his, her, or its Recognized Loss minus the amount of any compensation for the loss that resulted from the conduct described in the Order that was received from another source (e.g., class action settlement), to the extent known by the Fund Administrator (“Prior Recovery”), plus any Reasonable Interest awarded. That is, the distribution amount will be capped at the Recognized Loss less the Prior Recovery, plus any Reasonable Interest awarded. C. Reasonable Interest If the Net Available Distribution Fund exceeds the amount necessary to pay all Eligible Claimants their Recognized Loss (minus any Prior Recovery) in full, the Fund Administrator, in consultation with the Commission staff, may include interest in the distribution amount to compensate for the time value of money. Reasonable Interest will be calculated using the Short-term Applicable Federal Rate plus three percent (3%), compounded quarterly from the end of the Relevant Period through the approximate date of the disbursement of the funds. If there are insufficient funds to pay Reasonable Interest in full to all Eligible Claimants, Reasonable Interest will awarded on a pro rata basis from the excess funds. D. Minimum Distribution Amount The Minimum Distribution Amount will be $10.00. An Eligible Claimant whose distribution amount is less than the Minimum Distribution Amount will be deemed ineligible and his, her, or its distribution amount may be reallocated on a pro rata basis to Eligible Claimants whose distribution amounts are greater than or equal to the Minimum Distribution Amount. E. Payee and Distribution Payment An Eligible Claimant whose distribution amount equals or exceeds the Minimum Distribution Amount will be deemed a Payee, and will receive a Distribution Payment equal to his, her, or its calculated distribution amount. 6 Table A. Valeant Pharmaceuticals International, Inc. Common Stock Inflation Schedule. Date Range October 20, 2014 through July 22, 2015 July 23, 2015 through October 20, 2015 October 21, 2015 through October 25, 2015 October 26, 2015 through October 29, 2015 October 30, 2015 through April 28, 2016 On or after April 29, 2016 Inflation per Share $49.89 $61.60 $35.01 $28.52 $11.71 $0.00 Table B. Valeant Pharmaceuticals International, Inc. Common Stock Moving Average Closing Price, April 29, 2016 – July 27, 2016 4/29/2016 5/2/2016 5/3/2016 5/4/2016 5/5/2016 5/6/2016 5/9/2016 5/10/2016 5/11/2016 5/12/2016 5/13/2016 5/16/2016 5/17/2016 5/18/2016 5/19/2016 5/20/2016 5/23/2016 5/24/2016 5/25/2016 5/26/2016 5/27/2016 Moving Average Closing Price from April 29, 2016 to Date Shown $33.36 $33.01 $33.93 $34.15 $34.22 $33.50 $32.72 $32.12 $31.48 $30.82 $30.38 $30.10 $30.02 $29.87 $29.63 $29.49 $29.30 $29.12 $29.02 $28.91 $28.89 Moving Average Closing Price from April 29, 2016 to Date Shown $28.87 $28.91 $28.93 $28.93 $28.92 $28.77 $28.59 $28.48 $28.34 $28.19 $28.07 $27.93 $27.77 $27.61 $27.47 $27.31 $27.16 $27.03 $26.86 $26.67 $26.51 Date 5/31/2016 6/1/2016 6/2/2016 6/3/2016 6/6/2016 6/7/2016 6/8/2016 6/9/2016 6/10/2016 6/13/2016 6/14/2016 6/15/2016 6/16/2016 6/17/2016 6/20/2016 6/21/2016 6/22/2016 6/23/2016 6/24/2016 6/27/2016 6/28/2016 7 Date 6/29/2016 6/30/2016 7/1/2016 7/5/2016 7/6/2016 7/7/2016 7/8/2016 7/11/2016 7/12/2016 7/13/2016 7/14/2016 7/15/2016 7/18/2016 7/19/2016 7/20/2016 7/21/2016 7/22/2016 7/25/2016 7/26/2016 7/27/2016 Moving Average Closing Price from April 29, 2016 to Date Shown $26.36 $26.22 $26.09 $25.96 $25.90 $25.85 $25.79 $25.74 $25.69 $25.61 $25.56 $25.51 $25.48 $25.44 $25.43 $25.41 $25.37 $25.32 $25.29 $25.26 Table C. Valeant Pharmaceuticals International, Inc. Bond Inflation Schedule (Inflation per $100 Par Value) Bond CUSIP (144A Offering / Reg S Offering) Date Range 91831AAA9 / 91831AAB7 / 91831AAC5 / EK8066186 / 92912EAA1 / 92912EAC7 / 91829KAA1 / 91911KAD4 / 91911KAE2 / 91911XAM6 / 91911XAQ7 / 91911XAS3 / EK8064983 EK8064801 EK8065162 EK7990790 EJ7382413 EJ7382611 EJ3752296 EJ9423611 EK7043582 EI4142986 EI5650532 EI5995440 10/20/2014 - 10/31/2014 $14.61 $12.52 $11.49 $13.82 $11.26 $9.02 $14.96 11/01/2014 - 11/30/2014 $14.58 $12.41 $11.50 $13.89 $11.18 $9.01 $14.93 12/01/2014 - 12/31/2014 $14.44 $12.10 $11.43 $13.81 $11.01 $8.95 $14.83 01/01/2015 - 01/14/2015 $14.54 $11.87 $11.46 $13.97 $10.93 $8.95 $14.89 01/15/2015 - 01/31/2015 $14.54 $11.87 $11.46 $13.97 $13.81 $10.93 $8.95 $14.89 02/01/2015 - 02/28/2015 $14.48 $11.70 $11.44 $13.96 $13.70 $10.84 $8.87 $14.76 03/01/2015 - 03/12/2015 $14.10 $11.37 $11.04 $13.52 $13.38 $10.63 $8.70 $14.50 03/13/2015 - 03/31/2015 $5.81 $11.97 $11.74 $14.97 $14.10 $11.37 $11.04 $13.52 $13.38 $10.63 $8.70 $14.50 04/01/2015 - 04/30/2015 $5.88 $12.15 $11.98 $15.04 $14.07 $11.17 $11.08 $13.69 $13.52 $10.55 $8.66 $14.48 05/01/2015 - 05/31/2015 $5.84 $12.01 $11.78 $14.78 $14.01 $10.92 $11.08 $13.63 $13.34 $10.40 $8.60 $14.44 06/01/2015 - 06/30/2015 $5.74 $11.83 $11.60 $14.48 $13.82 $10.63 $10.87 $13.41 $13.16 $10.26 $8.46 $14.27 07/01/2015 - 07/31/2015 $5.63 $11.81 $11.63 $14.24 $13.62 $10.36 $10.71 $13.28 $13.14 $10.07 $8.35 $14.01 08/01/2015 - 08/31/2015 $5.51 $11.70 $11.57 $14.21 $13.33 $10.10 $10.48 $13.08 $12.99 $9.91 $8.24 $13.83 09/01/2015 - 09/30/2015 $5.37 $11.40 $11.29 $13.70 $13.08 $9.80 $10.25 $12.66 $12.81 $9.75 $8.06 $13.60 10/01/2015 - 10/20/2015 $5.06 $10.63 $10.43 $12.65 $12.43 $9.33 $9.75 $11.95 $11.79 $9.49 $7.77 $13.16 10/21/2015 - 10/25/2015 -$1.97 $2.90 $2.59 $4.52 $3.40 $2.10 $3.53 $3.73 $3.36 $1.48 $6.82 $4.46 10/26/2015 - 10/29/2015 -$5.57 $1.33 $0.33 $2.25 $2.43 $0.99 $1.76 $1.79 $0.36 $0.99 $2.91 $2.68 On or after 10/30/2015 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 8 Table D. Moving Average Closing Prices for Valeant Pharmaceuticals International, Inc. Bonds, from October 30, 2015 to Date Shown Bond CUSIP (144A Offering / Reg S Offering) 91831AAA9 / 91831AAB7 / 91831AAC5 / EK8066186 / 92912EAA1 / 92912EAC7 / 91829KAA1 / 91911KAD4 / 91911KAE2 / 91911XAM6 / 91911XAQ7 / 91911XAS3 / EK8064983 EK8064801 EK8065162 EK7990790 EJ7382413 EJ7382611 EJ3752296 EJ9423611 EK7043582 EI4142986 EI5650532 EI5995440 Date 10/30/2015 $95.75 $84.25 $84.00 $81.33 $91.50 $95.50 $88.75 $85.25 $84.75 $91.50 $89.00 $89.50 11/2/2015 $91.69 $84.53 $84.22 $81.63 $91.47 $95.50 $89.00 $85.59 $84.56 $91.53 $88.72 $90.00 11/3/2015 $90.54 $85.10 $84.79 $82.39 $91.30 $95.71 $89.33 $85.85 $84.56 $91.94 $88.72 $90.42 11/4/2015 $89.63 $84.75 $84.66 $82.77 $91.47 $95.29 $89.31 $85.85 $84.42 $92.02 $89.06 $90.31 11/5/2015 $88.60 $84.28 $84.31 $82.36 $91.08 $94.80 $88.80 $85.20 $83.58 $91.50 $88.30 $89.40 11/6/2015 $88.21 $84.10 $84.18 $81.97 $90.90 $94.67 $88.58 $84.86 $83.16 $91.21 $87.84 $89.01 11/9/2015 $87.96 $84.13 $84.24 $81.76 $90.77 $94.68 $88.46 $84.72 $83.16 $91.18 $87.78 $88.83 11/10/2015 $87.97 $84.21 $84.34 $81.86 $90.90 $94.94 $88.59 $84.76 $83.35 $91.34 $87.96 $88.73 11/11/2015 $87.97 $84.21 $84.34 $81.88 $90.90 $94.94 $88.59 $84.76 $83.35 $91.34 $87.96 $88.73 $88.67 11/12/2015 $87.89 $84.02 $84.17 $81.86 $90.82 $94.99 $88.56 $84.76 $83.30 $91.39 $87.72 11/13/2015 $87.73 $83.79 $83.95 $81.66 $90.77 $95.05 $88.39 $84.60 $83.08 $91.39 $87.53 $88.43 11/16/2015 $87.59 $83.65 $83.74 $81.52 $90.63 $95.05 $88.33 $84.60 $82.84 $91.20 $87.40 $88.23 11/17/2015 $87.42 $83.51 $83.54 $81.37 $90.50 $95.03 $88.22 $84.39 $82.64 $91.09 $87.25 $88.05 11/18/2015 $87.31 $83.41 $83.43 $81.30 $90.38 $95.01 $88.13 $84.20 $82.57 $91.07 $87.21 $87.97 11/19/2015 $87.27 $83.41 $83.41 $81.23 $90.36 $95.01 $88.09 $84.09 $82.50 $91.07 $87.04 $87.97 11/20/2015 $87.23 $83.42 $83.50 $81.23 $90.37 $95.13 $88.16 $84.08 $82.58 $91.14 $87.04 $87.97 11/23/2015 $87.29 $83.55 $83.61 $81.35 $90.46 $95.29 $88.26 $84.08 $82.58 $91.22 $87.04 $88.05 11/24/2015 $87.43 $83.71 $83.78 $81.42 $90.46 $95.42 $88.39 $84.27 $82.74 $91.36 $87.04 $88.05 11/25/2015 $87.56 $83.85 $83.93 $81.48 $90.59 $95.52 $88.54 $84.27 $82.74 $91.53 $87.20 $88.05 11/27/2015 $87.56 $83.85 $83.93 $81.54 $90.59 $95.52 $88.54 $84.27 $82.74 $91.53 $87.20 $88.05 11/30/2015 $87.68 $84.03 $84.09 $81.66 $90.81 $95.64 $88.71 $84.48 $82.93 $91.53 $87.42 $88.21 12/1/2015 $87.84 $84.20 $84.26 $81.80 $91.03 $95.75 $88.92 $84.73 $83.12 $91.53 $87.42 $88.21 12/2/2015 $87.97 $84.34 $84.39 $81.80 $91.23 $95.83 $89.09 $84.73 $83.29 $91.73 $87.71 $88.41 12/3/2015 $88.08 $84.44 $84.47 $81.80 $91.40 $95.89 $89.27 $84.73 $83.29 $91.90 $87.71 $88.58 12/4/2015 $88.24 $84.55 $84.56 $81.91 $91.54 $95.98 $89.42 $84.73 $83.39 $91.90 $87.71 $88.58 12/7/2015 $88.36 $84.64 $84.63 $81.91 $91.69 $96.07 $89.57 $84.89 $83.49 $92.06 $87.71 $88.58 12/8/2015 $88.46 $84.68 $84.71 $81.94 $91.69 $96.13 $89.71 $85.07 $83.52 $92.06 $88.00 $88.72 12/9/2015 $88.58 $84.79 $84.82 $81.98 $91.85 $96.20 $89.86 $85.26 $83.58 $92.20 $88.19 $88.89 12/10/2015 $88.70 $84.88 $84.92 $82.04 $91.99 $96.27 $90.02 $85.45 $83.65 $92.35 $88.19 $89.09 12/11/2015 $88.74 $84.84 $84.89 $82.07 $92.06 $96.28 $90.09 $85.45 $83.71 12/14/2015 $88.75 $84.79 $84.88 $82.09 $92.10 $96.26 $90.12 $85.40 $83.64 $92.35 $92.39 $88.29 $88.35 $89.19 $89.27 12/15/2015 $88.90 $84.93 $85.03 $82.18 $92.27 $96.32 $90.28 $85.59 $83.79 $92.62 $88.63 $89.60 12/16/2015 $89.09 $85.11 $85.19 $82.18 $92.55 $96.43 $90.48 $85.87 $83.97 $92.86 $88.99 $89.95 12/17/2015 $89.26 $85.29 $85.33 $82.39 $92.81 $96.55 $90.71 $85.87 $84.14 $93.12 $89.31 $90.28 12/18/2015 $89.42 $85.43 $85.47 $82.59 $93.03 $96.65 $90.87 $86.12 $84.28 $93.36 $89.63 $90.60 12/21/2015 $89.56 $85.57 $85.60 $82.77 $93.25 $96.74 $91.03 $86.12 $84.28 $93.57 $89.92 $90.89 12/22/2015 $89.71 $85.71 $85.74 $82.92 $93.46 $96.82 $91.20 $86.38 $84.41 $93.57 $90.21 $91.17 12/23/2015 $89.84 $85.85 $85.89 $82.92 $93.66 $96.90 $91.35 $86.38 $84.56 $93.57 $90.21 $91.17 12/24/2015 $89.84 $85.97 $85.89 $82.92 $93.85 $96.90 $91.35 $86.38 $84.56 $93.57 $90.21 $91.17 12/28/2015 $89.84 $86.07 $86.00 $82.92 $93.85 $96.97 $91.35 $86.64 $84.70 $93.78 $90.21 $91.17 12/29/2015 $89.97 $86.19 $86.12 $82.92 $94.03 $97.04 $91.49 $86.86 $84.81 $94.02 $90.21 $91.42 $91.42 12/30/2015 $90.08 $86.29 $86.12 $82.92 $94.03 $97.04 $91.65 $86.86 $84.81 $94.23 $90.21 12/31/2015 $90.08 $86.37 $86.12 $82.92 $94.03 $97.10 $91.65 $86.86 $84.81 $94.23 $90.21 $91.42 1/4/2016 $90.17 $86.43 $86.19 $82.92 $94.19 $97.15 $91.76 $87.03 $84.90 $94.40 $90.45 $91.42 1/5/2016 $90.27 $86.51 $86.28 $83.04 $94.35 $97.21 $91.86 $87.20 $85.00 $94.56 $90.45 $91.66 1/6/2016 $90.38 $86.59 $86.37 $83.14 $94.51 $97.26 $91.97 $87.35 $85.09 $94.70 $90.45 $91.89 9 1/7/2016 $90.47 $86.64 $86.44 $83.22 $94.63 $97.31 $92.07 $87.50 $85.17 $94.84 $90.66 $91.89 1/8/2016 $90.55 $86.70 $86.48 $83.31 $94.74 $97.35 $92.19 $87.50 $85.25 $94.84 $90.66 $92.11 1/11/2016 $90.61 $86.72 $86.49 $83.38 $94.83 $97.38 $92.25 $87.58 $85.29 $94.94 $90.66 $92.11 1/12/2016 $90.67 $86.74 $86.52 $83.42 $94.83 $97.40 $92.32 $87.58 $85.33 $95.04 $90.66 $92.32 1/13/2016 $90.71 $86.75 $86.54 $83.46 $94.89 $97.41 $92.36 $87.58 $85.33 $95.04 $90.66 $92.47 1/14/2016 $90.76 $86.75 $86.55 $83.48 $94.89 $97.43 $92.42 $87.59 $85.33 $95.09 $90.80 $92.57 1/15/2016 $90.77 $86.74 $86.55 $83.46 $94.92 $97.43 $92.43 $87.60 $85.33 $95.11 $90.91 $92.57 1/19/2016 $90.78 $86.75 $86.56 $83.46 $94.97 $97.45 $92.46 $87.60 $85.34 $95.15 $90.91 $92.65 1/20/2016 $90.78 $86.76 $86.57 $83.44 $95.03 $97.45 $92.47 $87.59 $85.34 $95.18 $90.91 $92.71 1/21/2016 $90.83 $86.80 $86.62 $83.43 $95.09 $97.47 $92.52 $87.69 $85.40 $95.18 $91.06 $92.71 1/22/2016 $90.89 $86.86 $86.69 $83.47 $95.17 $97.51 $92.59 $87.79 $85.49 $95.26 $91.15 $92.77 1/25/2016 $90.95 $86.92 $86.75 $83.51 $95.25 $97.54 $92.65 $87.90 $85.58 $95.26 $91.32 $92.92 1/26/2016 $91.02 $86.99 $86.82 $83.55 $95.34 $97.58 $92.73 $88.03 $85.66 $95.34 $91.49 $92.92 1/27/2016 $91.08 $87.04 $86.89 $83.59 $95.41 $97.61 $92.80 $88.15 $85.74 $95.42 $91.49 $93.07 10 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A588891c8c8134571. Public record. Not legal advice.