Richard Scrushy, the former chief executive of HealthSouth, sold more than 13m shares of company stock while in possession of non-public information, the US government alleges.
The Securities and Exchange Commission late on Thursday filed insider trading charges against Mr Scrushy, claiming that he made more than $170m from his sale of at least 13.8m shares “based upon his knowledge of HRC’s actual financial results and the impact that disclosure of those results would have on the price of HRC shares”.
HealthSouth announced last September the SEC had launched an investigation into insider trading allegations. The company then established its own committee to look into the charges and hired Fulbright & Jaworski, an outside law firm, to investigate.
About six weeks later, HealthSouth said the independent report had cleared Mr Scrushy, but the group later issued a statement that the report had also said: “Fulbright & Jaworski expresses no views as to the inferences that may be drawn from the facts and circumstances contained in this letter”.
Fulbright & Jaworski indicated that it could not respond because of its duties of confidentiality.
The insider trading charges are the latest in a string of developments since the SEC charged HealthSouth and Mr Scrushy with inflating earnings by at least $1.4bn from 1999 through the second quarter of 2002.
Since then, eight executives, including two former chief financial officers, have pleaded guilty to criminal fraud charges. William Owens and Weston Smith, two ex-CFOs, are also facing insider trading charges.
HealthSouth’s board, criticised for some members’ close links to Mr Scrushy, was expected to meet on Friday. The company declined to comment on proceedings.