02 July 2012, GlaxoSmithKline reportedly pled guilty to fraudulent activities involving the drugs Paxil, Avandia and Wellbutrin.  The company is being fined a record $3 billion USD!

The U.S. Department of Justice says the pharmaceutical giant claimed the drugs could be used to treat conditions and/or people for which they were not approved!

Paxil is meant for adults only, but was sold for use in children! The antidepressant Wellbutrin was sold as a weight loss drug!  GlaxoSmithKline was also accused of failing to report safety data, concerning the diabetes drug Avandia, to the U.S. Food & Drug Administration from 2001 to 2007.

Also, under a type of probation, for the next five years company executives could lose their bonuses to the government, if any employee is caught conducting fraudulent activity.  As well, sales reps will no longer be paid based on total sales, but on the quality of their job performance.

Interestingly, when news of GlaxoSmithKline’s guilty plea was heard investors jumped on the company’s stock driving the price up!  Why would an ‘honest’ investor want to buy stock in a company who admits to fraud?