In my October 6, 2003 column on Fool.com, I questioned Schering-Plough's (NYSE:SGP) management for how they released the news of the dividend cut to shareholders. The new CEO Fred Hassan was not present during the conference call to discuss the dividend cut and I found that simply unbelievable. Well Schering-Plough is at it again.

This past Tuesday, Nov. 18, the company held an analyst meeting where Mr. Hassan candidly discussed the dire situation the company is faced with in the short-term. I give him credit for being honest with current investors by telling them any turnaround will not take place overnight, but the information the company conveniently left out of its analyst day is troubling.

Then on Wednesday this week the company filed an 8-K form with the SEC stating that on "Friday November 14, 2003 SGP received notice that the SEC had issued a formal order to investigate compliance by Polish subsidiaries of certain pharmaceutical companies with the U.S. Foreign Corrupt Practices Act of 1977." The release further states, "The staff had previously requested voluntary production of documents related to our Polish subsidiary, and we are continuing to cooperate with the SEC in responding to this inquiry."

In my opinion, information about the SEC investigation should have been mentioned during the investor meeting, not tucked quietly away in an SEC filing. In addition, also this Wednesday, the company issued a press release announcing it intends to raise $1.75 billion through a public offering of senior notes. Again, no mention of the SEC investigation in the debt offering press release.

While I am at it, the company could have mentioned the debt offering during its investor day also. I am not sure if anything will come of the SEC investigation, but that is not the issue. The point here is that on at least two occasions Schering-Plough has been less than up front with shareholders. Not to mention the fact that the company has a terrible record with SEC investigations. I would not fault investors for being nervous.

The stock fell about 5% today, after getting a nice lift Tuesday. I believe investors are concerned about the SEC filing as well as the debt offering. On the SEC front, Schering-Plough cannot afford anymore missteps, and the debt offering will likely weaken Schering-Plough's balance sheet, which has been one positive for the company throughout this period of weakness.

I understand Fred Hassan has been very successful with past turnaround projects, but I also know that no one is prefect. Based on my valuation work in October, I do not think the stock is a compelling buy at these levels. Add in how management buried an SEC investigation in a 8-K filing and increasing debt, and I really see no reason to own SGP at these levels - even looking three years out.

Paul Jaber can be reached at pjaber@perpetualvalue.com .