"HealthSouth's fraud represents an appalling betrayal of investors," said Stephen M. Cutler, the SEC's Director of Enforcement. "HealthSouth's standard operating procedure was to manipulate the company's earnings to create the false impression that the company was meeting Wall Street's expectations."
Richard P. Wessel, District Administrator of the SEC's Atlanta District Office, added: "The Commission's action against HealthSouth is another example of the excellent coordination and cooperation that has become the hallmark of efforts by the Commission and the Department of Justice to combat financial fraud. By bringing to bear the expertise of both agencies, we achieve maximum deterrence and greater relief for investors."
The Commission alleges that HealthSouth and Scrushy's actions violated and/or aided and abetted violations of the antifraud, reporting, books-and-records, and internal controls provisions of the federal securities laws. For these violations, the Commission is seeking a permanent injunction against HealthSouth and Scrushy, civil money penalties and disgorgement of all ill-gotten gains or losses avoided by both defendants, and an order prohibiting Scrushy from ever serving as an officer or director of a public company.
The Commission thanks the U.S. Attorney's Office for the Northern District of Alabama, the U.S. Department of Justice, and the Federal Bureau of Investigation for their cooperation in this matter.
The Commission's investigation is continuing.
