UnitedHealth shareholders can sue firm over stocks

UnitedHealth Group Inc.’s shareholders will be allowed to sue the largest U.S. health insurance company as a group over claims of improper backdating of stock options, a judge said.
Bloomberg News reported that U.S. District Judge James M. Rosenbaum in Minneapolis last week granted the shareholders’ motion for class certification without commenting on the merits of the lawsuit filed in 2006.
UnitedHealth and certain officers and directors “engaged in a solitary scheme to reward themselves – especially their chief executive officer – and others by showering themselves with stock options,” shareholders said in court papers. The company failed to disclose stock-option backdating to investors, in violation of federal securities laws, they said.
UnitedHealth is among at least 225 companies that have disclosed internal or federal probes of backdating, the practice of setting dates for stock options before they are issued to magnify their value.
UnitedHealth, based in Minnetonka, Minn., opposed granting class certification.
Don Nathan, a UnitedHealth spokesman, said the company hasn’t decided whether to appeal the decision. The class certification “was not unexpected,” he said.
William W. McGuire was forced to resign as UnitedHealth’s chairman and chief executive officer in October 2006 after an independent law firm found evidence he participated in backdating. McGuire’s attorney, David Brodsky, didn’t return a call for comment.
McGuire agreed in December to relinquish about $600 million in benefits as part of a settlement with the U.S. Securities and Exchange Commission and UnitedHealth, as well as shareholders who filed a separate lawsuit on behalf of the company, Nathan said. The settlement, which must be approved by a judge, isn’t part of the shareholders’ securities case, he said.
McGuire’s previous agreement “has no effect on our case whatsoever,” said attorney Ramzi Abadou, who represents the shareholders. The investors are seeking billions of dollars in damages, he said last week in an interview. A trial is scheduled for July 1, he said. &#8226

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