HealthSouth's Scrushy sold $187 mln in stock
NEW YORK, March 25 (Reuters) - HealthSouth Corp. <HRC.N> <HLSH.PK> founder Richard Scrushy sold about $187 million in company stock in the five years ended last July, a period when the company is alleged to have artificially inflated its profit.
Sales and transfers of company stock by Scrushy last May and July -- followed by negative news in August that triggered a decline in the company's stock -- originally led the U.S. Securities Exchange Commission to investigate the company.
While Wall Street had awaited insider-trading charges, last Wednesday the government charged the company and Scrushy with accounting fraud. HealthSouth provides services such as outpatient rehabilitation and post-surgical care.
The company overstated profit by $1.4 billion through a series of meetings at which financial executives planned how to adjust reimbursements higher or reduce expenses in order to make results look better, the SEC alleged.
Scrushy, who had served as CEO, was put on administrative leave by the company after the charges were made by the government. He has been criticized by investors for his lavish lifestyle.
On May 14, 2002, Scrushy exercised options for 5,275,360 shares at $3.78 per share and sold them all during the same day for $14.05 each, or a total of $74.1 million, according to a document the company filed with the SEC.
On July 31 of last year, he transferred 2.5 million common shares to HealthSouth to satisfy a debt to the company.
Scrushy's other big stock sale took place in November 1997 when he exercised options for 4 million shares for $3.78 per share and sold them the same day at $27 per share, according to an SEC filing. The 4 million shares were worth $108 million.
The New York Stock Exchange on Tuesday moved to delist the company's stock and moved it to the "pink sheets." The shares on Tuesday afternoon were trading at about 10 cents.
03/25/03 14:54 ET |
