SEC Division of Corporation Finance no-action letter: Cardinal Health, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
August 7,2007 DIVISION OF
CORPORATION FINANCE
Mr. Wayne Carlin
Wachtell, Lipton, Rosen &Katz
5 1 West 52nd Street
New York, N.Y. 10019-6150
Re: In the Matter of Cardinal Health, Inc. (HO-09773) Waiver Request of Ineligible Issuer Status under Rule 405 of the Securities Act Dear Mr. Carlin:
This is in response to your letter dated July 16,2007, written on behalf of Cardinal Health, Inc. (Company), and constituting an application for relief from the Company being considered an "ineligible issuer" under Rule 405(l)(vi) of the Securities Act of 1933 (Securities Act) arising from the settlement of a civil injunctive proceeding with the Commission. On July 26,2007, the Commission filed a civil injunctive complaint (Complaint), in the United States District Court for the Southern District of New York, against The Company. The complaint alleges that the Company, among other things, violated Section 17(a) of the Securities Act and Section lo@) of the Securities Exchange Act of 1934 (Exchange Act). The Company filed a consent in which it agreed without admitting or denying the allegations of the Commission's Complaint, to the entry of a Final Judgment against it. Among other things, the Final Judgment as entered on August 1, 2007, permanently enjoins the Company from violating Section 17(a) of the Securities Act and
Section lo@) and Rule lob-5 of the Exchange Act.
Based on the facts and representations in your letter, and assuming the Company complies with the Final Judgment, the Commission, pursuant to delegated authority has determined that the Company has made a showing of good cause under Rule 405(2) and that the Company will not be considered an ineligible issuer by reason of the entry of the Final Judgment. Specifically, we determined under these facts and representations that the Company has shown that the terms of the Order and the Final Judgment were agreed to in a settlement prior to December 1,2005. Accordingly, the relief described above fiom the Company being an ineligible issuer under Rule 405 of the Securities Act is hereby granted. Any different facts than as represented or non￾compliance with the Final Judgment might require us to reach a different conclusion. Sincerely, chief, Office of Enforcement Liaison Division of Corporation Finance

MARTIN LIPTON
HERBERT M. WACHTELL
RICHARD G. MASON
DOUGMS K. MAYER 51 WEST 52ND STREET J. AUSTIN LYONS LORI S. SHERMAN VINAY SHANDAL MEREDITH L. TURNER BERNARD W. NUSSBAUM MICHAEL J. SEGAL JONATHAN E. PICKHARC IT KARESSA L. CAlN RICHARD D. KATCHER DAVlD M. SILK NEW YORK, N.Y. 10019-6150 NELSON 0. FlTTS WILLIAM EDWARDS ALLAN A. MARTIN ROBIN PANOVKA JEFFREY C. FOURMAUX JAMES R. GlLMARTlN LAWRENCE B. PEDOWITZ ROBERT B. MAZUR DAVlD A. KATZ ILENE KNABLE GOTTS TELEPHONE: (212) 403-1000 JEREMY L. GOLDSTEIN JOSHUA M. HOLMES ADAM M. GOGOLAK JONATHAN GOLDIN PAUL VIZCARRONDO, JR. PETER C. HElN DAVlD M. MURPHY JEFFREY M. WINTNER FACSIMILE: (212) 403-2000 DAVlD E. SHAPIRO ANTE VUClC ROGER J. GRIESMEYER DANIEL E. HEMLl HAROLD S. NOVIKOFF TREVOR 5. NORWITZ IAN BOCZKO GAVlN W. HOLMES DAVlD M. EINHORN BEN M. GERMANA LAURYN P. GOULDIN MATTHEW 5. LEVINE KENNETH 8. FORREST ANDREW J. NUSSBAUM GEORGE A. KATZ (1 965-1989) MATTHEW M. GUEST GORDON 5. MOODIE MEYER G. KOPLOW THEODORE N. MlRVlS RACHELLE SILVERBERG DAVlD C. BRYAN JAMES H. FOGELSON (1967-1991) DAVlD E. KAHAN MARK A. KOENIG JOHN A. NEUMARK DONGJU SONG EDWARD D. HERLIHY STEVEN A. COHEN DAVlD K. LAM LINDSAY R. SMITH DANIEL A. NEFF GAVlN D. SOLOTAR OF COUNSEL MICHAEL 5. WINOGRAD AMANDA L. STRAUB ERlC M. ROTH DEBORAH L. PAUL KATHRYN GETTLES-ATWA BRADLEY R. WILSON WARREN R. STERN DAVlD C. KARP WILLIAM T. ALLEN LEONARD M. ROSEN DANIELLE L. ROSE FRANC0 CASTELLI ANDREW R. BROWNSTEIN MICHAEL H. BYOWIT2 PAUL K. ROWE RICHARD K. KIM JOSHUA R. CAMMAKER MARK GORDON PETER C. CANELLOS THEODORE GEWERTZ MICHAEL W. SCHWARTZ ELLIOTT V. STEIN BENJAMIN M. ROTH ANDREW A. SCHWARTZ DAVID M. ADLERSTEIN ROSS A. FIELDSTON SCOTT W. GOLENBOCK MOEZ M. KABA MARC WOLINSKY JOSEPH D. LARSON KAREN G. KRUEGER J. BRYAN WHITWORTH SHlRl BEN-YISHAI CAlTH KUSHNER DAVID GRUENSTEIN LAWRENCE 5. MAKOW THEODORE A. LEVINE AMY R. WOLF JOSHUA A. FELTMAN J. ALEJANDRO LONGORIA PATRICIA A. VLAHAKIS JARED M. RUSMAN STEPHEN M. FRANCIS GRAHAM W. MELl STEPHEN G. GELLMAN STEVEN A. ROSENBLUM JEANNEMARIE O'BRIEN WAYNE M. CARLIN COUNSEL JONATHAN H. GORDON MARGARET ISA BUTLER JOSHUA M. MILLER OPHlR NAVE PAMELA 5. SEYMON JAMES COLE, JR. EMIL A. KLEINHAUS GREGORY E. PESSIN STEPHANIE J. SELIGMAN STEPHEN R. DlPRlMA MICHELE J. ALEXANDER PAULA N. GORDON WILLIAM E. SCHEFFER CARRIE M. REILLY ERlC 5. ROBINSON NICHOLAS G. DEMMO DAVID B. ANDERS NANCY B. GREENBAUM ADlR G. WALDMAN WON 5. SHIN JOHN F. SAVARESE IGOR KIRMAN ADRIENNE ATKINSON MAURA R. GROSSMAN AREF H. AMANAT JEFFREY UNGER SCOTT K. CHARLES JONATHAN M. MOSES ANDREW J.H. CHEUNG IAN L. LEVIN RONALD C. CHEN MARK F. VEBLEN ANDREW C. HOUSTON T. ElKO STANGE DAMIAN G. DIDDEN ADAM J. SHAPIRO 8. UMUT ERGUN CARMEN WOO PHILIP MlNDLlN DAVlD A. SCHWARTZ PAMELA EHRENKRANZ HOLLY M. STRUTT EVAN K. FARBER IGOR FUKS DAVlD 5. NElLL JOHN F. LYNCH ROBERT A. FRIEDMAN MICHAEL KRASNOVSKY BETTY W. GEE JODI J. SCHWARTZ WILLIAM SAVITT SARAH A. LEWIS JONATHON R. LA CHAPELLE ADAM 0. EMMERICH ERlC M. ROSOF YELENA ZAMACONA BRANDON C. PRICE CRAIG M. WASSERMAN MARTIN J.E. ARMS GARRETT B. MORITZ ALISON M.
ZIESKE GEORGE T. CONWAY Ill GREGORY E. OSTLING JOSHUA A. NAFTALIS RALPH M. LEVENE July 16,2007 VIA FEDERAL EXPRESS Mary Kosterlitz, Esq. Chief, Office of Enforcement Liaison Division of Corporation Finance U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: In the Matter of Cardinal Health, Inc. (HO-09773) Dear Ms. Kosterlitz:
On behalf of our client, Cardinal Health, Inc. ("Cardinal"), we hereby respectfully request a waiver of any "ineligible issuer" status that may arise pursuant to Rule 405 promul￾gated under the Securities Act of 1933 with respect to Cardinal as a result of a proposed settle￾ment between Cardinal and the Securities and Exchange Commission. It is our understanding that the Division of Enforcement does not object to the grant of the requested waiver.

Mary Kosterlitz, Esq.
July 16,2007
Background
Beginning in mid-2005, Cardinal engaged in settlement discussions with the staff of the Division of Enforcement ("Staff ') concerning a contemplated settlement of the above￾captioned investigation. Prior to December 1,2005, Cardinal reached an agreement in principle with the Staff regarding the terms of the settlement. We understand that the Staff concurs with this statement. Cardinal disclosed the agreement in principle in a Form 8-K filed on January 26, 2006, in which the Company announced its financial results for the quarter ended December 3 1,
2005. Pursuant to the proposed settlement, the Commission will file a Complaint (the "Com￾plaint") against Cardinal in the United States District Court for the Southern District of New
York. Cardinal has executed a Consent of Defendant Cardinal Health, Inc. (the "Consent") in which Cardinal neither admits nor denies any of the allegations in the Complaint, except as to jurisdiction, but consents to the entry of a final judgment by the District Court against Cardinal (the "Final Judgment"). The allegations in the Complaint will relate primarily to certain disclo￾sure and financial reporting practices at Cardinal, and related books and records and controls. The Final Judgment, among other things, will order Cardinal not to commit any future violations of Section 17(a) of the Securities Act; Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act; and Exchange Act Rules lob-5, 12b-20, 13a- 1, 13a- 1 1 and 13a- 13; and will order Cardinal to pay a civil money penalty of $35 million and disgorgement of $1 .OO for violations of the same provisions. Discussion Under the recently adopted and amended Securities Act rules, an issuer classified as a "well-known seasoned issuer"("~~~I")' is entitled to the use of a streamlined automatic shelf registration process2 and exemption from "quiet period" restrictions prohibiting cornmuni￾cation during the 30-day period prior to the filing of a registration ~tatement.~ The new rules fur￾ther permit most other issuers to use a "free writing prospectus" after a registration statement is filed to communicate information about a registered offering of se~urities.~ Rule 405, however, defines a class of certain "ineligible issuers" who may not use automatic shelf registrations or make communications within 30 days prior to filing a registration ~tatement.~ Ineligible issuers are also prohibited from using post-filing free writing prospectuses.6 An issuer is an ineligible issuer for the purposes of Rule 405 if, among other things, "[wlithin the past three years (but in the case of a decree or order agreed to in a settle￾ment, not before December 1,2005), the issuer or any entity that at the time was a subsidiary of 1 See Securities Offering Reform, Rel. Nos. 33-8591,34-52056 (July 19,2005) (to be codified at 17 C.F.R. 5 230.405) ("Rule 405") (definition of a "well-known seasoned issuer"). See Rule 405 (definition of an "automatic shelf registration statement"). See Securities Offering Reform, supra (rule to be codified at 17 C.F.R. 5 230.163). See id. (rule to be codified at 17 C.F.R. 5 230.164) ("Rule 164"). See Rule 405 (definition of an "ineligible issuer"). See Rule 164.

Mary Kosterlitz, Esq.
July 16,2007 the issuer was made the subject of any judicial or administrative decree or order arising out of a governmental action that: (A) Prohibits certain conduct or activities regarding, including future violations of, the anti-fraud provisions of the federal securities laws."7 Ineligible issuer status may be waived if "the Commission determines, upon a showing of good cause, that it is not nec￾essary under the circumstances that the issuer be considered an ineligible iss~er."~ The Commis￾sion has delegated to the Division of Corporation Finance the authority to grant or deny applica￾tions requesting that an issuer not be considered an ineligible issuer as defined in Rule 405. Cardinal seeks a waiver of any ineligible issuer status that may arise under Rule 405 as a result of the entry of the Final Judgment, on the ground that Cardinal entered into an agreement in principle as described above prior to December 1,2005. Under such circum￾stances, Cardinal should be treated as if it were the subject of an order agreed to in a settlement prior to December 1,2005. Accordingly, Cardinal should be determined not to be an "ineligible issuer" within the meaning of Rule 405. In light of the ground for relief discussed above, we believe that ineligible issuer status is unwarranted, is not in the public interest, and is not necessary for the protection of in￾vestors, and we respectfully urge the Division of corporation Finance to grant a waiver, effective upon the entry of the Final Judgment, of any ineligible issuer status with regard to Cardinal that may arise pursuant to Rule 405. If you have any questions regarding this request, please contact me at 212-403- 1324. Very truly yours, Rule 405. Id.