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April 30, 2008

Ernst & Young settles HealthSouth lawsuit

Ernst & Young US (E&Y) has settled a $109 million securities class action with investors of US-based health care company HealthSouth.

The action was led by the New Mexico State Investment Council and the Educational Retirement Board of New Mexico.

Investors alleged the defendants manipulated their accounting in various ways over several years. This caused HealthSouth’s financial statements to be materially false and misleading, causing investors to overpay for HealthSouth securities and suffer hundreds of millions of dollars of damages.

The action alleged E&Y knew that HealthSouth’s financial statements were materially overstated and failed to conduct audits in compliance with Generally Accepted Auditing Standards.

E&Y said the settlement allowed it to resolve the litigation brought by the shareholders of HealthSouth.

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