FOR IMMEDIATE RELEASE: March 25, 2009
Labaton Sucharow LLP Settles Securities Class Action Against Ernst & Young LLP for $109 Million
NEW YORK (March 25, 2009) — The law firm of Labaton Sucharow LLP, along with Co-Counsel Coughlin Stoia Geller Rudman & Robbins LLP, announced today that they have reached a settlement of $109 million with Ernst & Young LLP in a securities class action against HealthSouth Corporation. The action, entitled In re HealthSouth Corp. Securities Litigation, is being prosecuted for the benefit of a class of investors led by, among others, Lead Plaintiffs the New Mexico State Investment Council and the Educational Retirement Board of New Mexico. The action is pending before the Honorable Karon O. Bowdre in the U.S. District Court for the Northern District of Alabama, Southern Division, and the proposed settlement requires Court approval.
Lead Plaintiffs alleged that, during a period of several years, the defendants manipulated their accounting in various ways, which caused HealthSouth’s financial statements to be materially false and misleading causing investors to overpay for HealthSouth’s securities and suffer hundreds of millions of dollars of damages.
Lead Plaintiffs alleged the following accounting errors and irregularities against Ernst & Young LLP (E&Y):
-E&Y knew that HealthSouth’s financial statements were materially overstated.
-E&Y failed to conduct audits of HealthSouth that were in compliance with Generally Accepted Auditing Standards.
-E&Y did not test a single nonstandard journal entry or test the general ledger of HealthSouth.
-E&Y permitted HealthSouth to impose scope limitations on its audit of the Company.Thomas A. Dubbs, Senior Partner at Labaton Sucharow LLP, stated that “We are pleased with this settlement, which is one of the largest settlements ever obtained against an outside auditor in a class action securities fraud case.”
Lead Plaintiffs previously settled with former defendant HealthSouth Corporation in January 2007 for $445 million.
More information about Labaton Sucharow is available at www.labaton.com.