U.S. Securities and Exchange Commission
Litigation Release No. 18904 / September 28, 2004
Accounting and Auditing Enforcement Release No. 2111 / September 28, 2004
Securities and Exchange Commission v. Michael Martin and Malcolm E. McVay, United States District Court for the Northern District of Alabama, Civil Action No. CV-03-AR-2424-S
On September 24, 2004, the Honorable William M. Acker, Jr., U. S. District Judge for the Northern District of Alabama, entered Final Judgments as to defendants Michael Martin and Malcolm E. McVay ("the defendants"), former Chief Financial Officers of HealthSouth Corporation.
The Final Judgment as to Martin enjoined him from further violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The Final Judgment as to McVay enjoined him from further violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-13 and 13a-14 thereunder. The defendants were also permanently barred from serving as officers or directors of a public company. The defendants were not ordered to pay disgorgement and civil penalties in view of the forfeitures and fines ordered against them in the related criminal proceedings. The defendants consented to the entries of the judgments without admitting or denying any of the allegations of the Commission's Complaint.
The Complaint alleged that the defendants directed lower level accounting personnel to make false entries to HealthSouth's accounting books and records so that HealthSouth's quarterly and annual earnings would meet or exceed Wall Street expectations.
See also: L.R. 18044 / March 20, 2003; L. R. 18059 / April 1, 2003; L. R. 18060 / April 1, 2003; AAER No. 1749 / April 1, 2003; L. R. 18070 / April 4, 2003; and L. R. 18339 / September 10, 2003; AAER No. 2004 / May 10, 2004; and L.R. 18843 / August 23, 2004