A Cox Web statement said that the other lead plaintiffs include Central States and New Mexico in the securities class action litigation suit against HealthSouth Corporation, its former directors and executives, as well as HealthSouth’s investment bankers and former outside auditors (See Michigan Seeks Lead Plaintiff Status in HealthSouth Suit ).
As co-lead plaintiff, Michigan will co-manage the litigation on behalf of stockholders, negotiate potential settlement terms, and seek to maximize the recovery for the class.
Of the 38 individual defendants in the lawsuit, 15, including all of HealthSouth’s former chief financial officers, have pled guilty to criminal violations of the federal securities laws – the largest number of corporate officers from a single company to admit criminal wrongdoing, according to Cox.
After disclosure of the illegal overstatement of its income, HealthSouth dismissed its outside auditor, Ernst & Young (E&Y), and advised investors not to rely on any of the E&Y-audited financial statements HealthSouth issued as a public company.
In addition, Cox charged that certain individual defendants sold more than 16.7 million shares of their personal holdings of HealthSouth stock, which resulted in insider trading proceeds of more than $300 million. These individual defendants also kept millions of dollars in cash bonuses awarded as a result of the false profits the company reported from 1997 through 2002, according to the announcement.