Tuesday, February 22, 2005

Will Scrushy Get Back in the Saddle?

An article in the Wall Street Journal (Feb. 22) speculates on whether Richard Scrushy will seek to regain his CEO position if he is acquitted in his criminal trial.  While that is getting a little bit ahead of things, Scrushy remains a large shareholder of the company and likely has allies in management. While Scrushy was fired as CEO in 2003, he retains his board seat and shareholders have not been asked to remove him because there has not been an annual meeting since 2003 --  the company has not filed its quarterly or annual reports since then because of problems with getting certified financial statements while the auditors prepare a restatement of prior years. HealthSouth stock was delisted by NASDAQ and only trades on  the "pink sheets," although it remains viable, having avoided bankruptcy. Even if Scrushy wanted to return to HealthSouth as an officer, he faces an SEC civil enforcement action seeking, among other things, a director & officer bar for securities law violations.  A conviction on almost any count of the indictment will likely lead to a bar. The criminal trial resumes today with more testimony (and cross-examination) about "the family" that conspired to inflate the company's earnings (see AP story here). (ph)


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