Litigation Release No. 19766 / July 20, 2006

Accounting and Auditing Enforcement Release No. 2461 / July 20, 2006

William T. Owens and Weston L. Smith, United States District Court for the Northern District of Alabama, Civil Action No. CV-03-CO-0720-S

On July 14, 2006, the Honorable L. Scott Coogler, U. S. District Judge for the Northern District of Alabama, entered a Final Judgment as to defendant Weston L. Smith (Smith), who formerly served as chief financial officer of HealthSouth Corporation. The Final Judgment enjoined Smith from future violations of Section 17(a) of the Securities Act of 1933 and 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. Smith was also permanently barred from serving as an officer or director of a public company. Smith was ordered to pay disgorgement of $4,897,124 and prejudgment interest of $2,021,211, provided that $1.5 million of the disgorgement and prejudgment interest is deemed satisfied by forfeiture and restitution ordered against him in the related criminal proceeding. The judgment waived the remainder and did not order Smith to pay a civil penalty based on his sworn representations in his Statement of Financial Condition. Smith consented to the entry of the judgment without admitting or denying any of the allegations of the Commission's Complaint.

The Commission's Complaint, filed on March 31, 2003, alleged that Smith made or directed HealthSouth employees to make false accounting entries to inflate reported operating results in order to meet or exceed Wall Street earnings expectations. In the related criminal proceeding, Smith was sentenced to serve 27 months incarceration, among other things.

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; L. R. 18339 / September 10, 2003; AAER No. 2004 / May 10, 2004; L.R. 18904 / September 28, 2004; AAER No. 2111 / September 28, 2004; L.R. 19123 / March 7, 2005; AAER No. 2206 / March 7, 2005; L.R. 19743 / June 28, 2006; and AAER No. 2450 / June 28, 2006.