Becton Dickinson to Pay $175 Million for Misleading Investors on Alaris Infusion Pump

Becton, Dickinson and Company (BD), a New Jersey-based medical device manufacturer, has agreed to pay a $175 million civil penalty to the Securities and Exchange Commission (SEC). The settlement resolves allegations that BD misled investors about significant risks associated with its Alaris infusion pump, a product that once contributed about 10% of the company’s profits.

It’s a story that raises eyebrows about corporate decision-making. As early as 2016, BD knew that updates to its Alaris infusion pump software required FDA clearance. But instead of hitting pause to gather the necessary data for approval, the company kept selling the device—effectively brushing compliance concerns under the rug.

By 2019, the situation was dire. BD had identified more than 25 flaws in the Alaris software, flaws that its own experts flagged as posing the greatest risks to patient safety. And yet, the company continued to publicly downplay the issue. It assured investors that the product’s hiccups were part of “routine improvements,” while failing to warn that these flaws could lead to a regulatory showdown with the FDA.

That showdown came soon enough. In late 2019, the FDA rejected BD’s request to continue Alaris sales while the flaws were fixed. Despite this rebuff, BD resumed shipping the pump with partial software updates, skipping fixes that would require FDA clearance. The company took this gamble without telling investors just how risky the move was.

BD’s strategy to shield investors from the truth unraveled by early 2020. After the FDA learned that BD had resumed sales without clearance, the agency warned the company that its actions were inconsistent with prior agreements. Facing mounting pressure, BD was forced to halt Alaris shipments entirely.

The fallout was swift and brutal. When BD finally admitted to investors in February 2020 that it couldn’t sell the device until a full FDA clearance process was completed, its stock price plunged by 12%. Analysts, blindsided by the revelation, expressed outrage. One texted BD’s investor relations team: “I do not understand what happened here… I’m stunned and have a lot of angry people with pitchforks.”

What the SEC Found

The SEC’s investigation revealed that BD had not only misled investors about regulatory risks but also overstated its financial health. In the fourth quarter of 2019, the company inflated its operating income by a staggering 82% by failing to account for the costs of fixing Alaris.

The SEC determined that BD’s actions violated multiple securities laws, including antifraud provisions and rules governing financial disclosures. Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement, did not mince words: “BD repeatedly painted a misleading picture of its Alaris infusion pump for investors and then doubled down by keeping them in the dark when the device’s issues came to a head with the FDA in late 2019.”

Without admitting or denying the findings, BD agreed to the SEC’s terms:

• $175 Million Penalty: A hefty fine aimed at sending a clear message.
• Independent Oversight: BD will retain an independent compliance consultant to review and improve its disclosure controls.
• Cease-and-Desist: BD is prohibited from further violations of securities laws.

For BD, the $175 million penalty is a steep price, but the real cost may lie in the long road to restoring investor trust. Reputational damage in the highly regulated medical device sector is no small matter, especially when patient safety is at stake.

The case also serves as a broader warning to public companies across industries that transparency isn’t a mere box to check; it’s a critical safeguard against compounding risks. Misleading investors—whether by omission or deliberate misrepresentation—undermines market integrity and erodes the confidence that underpins long-term success.

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