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UBS Analyst Resigns Amid HealthSouth Conflict

Jul 3, 2003 | Wall Street Journal

UBS health-care-stock analyst Howard Capek, one of Wall Street's biggest boosters of HealthSouth Corp., resigned after UBS accused him of commenting on HealthSouth's stock while he was doing investment-banking work for the company.

Mr. Capek's resignation marks the latest fallout from UBS's unusually close relationship with HealthSouth. It also raises questions about Mr. Capek's alternating roles recommending HealthSouth shares to investors and helping UBS's investment bankers advise the Birmingham, Ala., company.

Mr. Capek's departure stems from comments he made in 1999 that violated internal policy at the Wall Street firm, owned by Swiss bank UBS AG (UBS) and formerly known as UBS Warburg.

Although UBS says it had no knowledge of an accounting fraud at HealthSouth, estimated by federal investigators to total $2.5 billion across several years, a congressional committee is looking into the ties between the two companies. Separately, the Securities and Exchange Commission and the Justice Department have requested documents and e-mails from UBS as part of their own wide-ranging inquiries into HealthSouth.

Mr. Capek, who was one of HealthSouth's biggest cheerleaders on Wall Street, said he resigned under "mutually agreeable terms" after UBS accused him of violating its policy related to so-called quiet periods during which analysts can't comment on a company's stock while they are working with investment bankers advising the company.

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