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Melnyk agrees to pay US$1 million in SEC settlement; sells Biovail shares

NEW YORK - Ottawa Senators owner Eugene Melnyk said Tuesday he will pay US$1 million to settle with the U.S. Securities and Exchange Commission but he doesn't admit to any wrongdoing.

The U.S. stock watchdog alleged Melnyk violated certain reporting obligations related to shares of Biovail Corp. (TSX:BVF) held in certain trusts set up for his wife and family.

Melnyk's position was that he didn't control the shares, so shouldn't have to disclose trading in them.

Under the court-approved settlement, Melynk agrees to abide by the U.S. reporting rule in future but doesn't admit to doing anything culpable.

Melynk founded Biovail but he no longer is employed by the company and has been frequently at odds with it current board and management.

Late Tuesday, a release from Melnyk stated he has sold more than 3.7 million common shares of Biovail on the Toronto and New York Stock Exchanges in transactions dating back as far as Dec. 16, 2008.

Melnyk now owns or exercises control or direction over about 11 per cent of outstanding Biovail common shares, the release said.

It also stated Melnyk sold the shares "to make cash available for other investment opportunities as they arise," and doesn't rule out future acquisition of additional Biovail securities, depending on market conditions and other factors.

The release makes no mention of the settlement with the SEC.

Biovail, for its part, has settled several regulatory matters and civil suits in an effort to put behind it a number of legal disputes that originated during Melnyk's time at the helm of the company.

The company agreed last year to pay a US$10 million fine to settle a U.S. regulator's charges of civil accounting fraud and deceiving investors and analysts.

It also reached a deal with the Ontario Securities Commission in January and agreed to pay $6.5 million including a record $5-million administrative penalty.

Melnyk has said he's working to resolve some of the reporting issues nearly five years ago but "categorically" denied the regulators' allegations that he misled Biovail investors.

He couldn't be reached for comment but a brief news release said, in part, that the payment "includes no admissions or conclusions about culpability in this matter at all."

Apart from remaining a significant shareholder in Biovail, Melnyk is also owner of Ottawa's NHL team and is working to set up a professional soccer team in the national capital.

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