The Association of U S West Retirees



UnitedHealth Faces Formal Probe
Wednesday, December 27, 2006

UnitedHealth Group Inc. said the Securities and Exchange Commission has launched a formal investigation into its stock-options practices.

The Minnetonka, Minn., health insurer had been the subject of an informal SEC inquiry since April.

"The company has cooperated and will continue to cooperate with the SEC," UnitedHealth said in an SEC filing.

The company has delayed financial reports while it reviews its stock-options practices, which have led to an internal probe, a management shake-up and a restatement of financial results.  UnitedHealth has said that using current accounting practices, the pretax charges for stock-based compensation expense are likely to range from $400 million to $600 million for the period 1994-2005, as well as from $25 million to $60 million for 2006.

The company has said it has substantially completed its analysis of the adjustments made to its financial statements and has asked for consultation on certain interpretive issues with the SEC's top accounting official.  UnitedHealth said it will review these issues with SEC staff before completing its restatement of historical financial statements and filing quarterly reports for the quarters ended June 30 and Sept. 30, 2006.

UnitedHealth is one of the largest companies to be ensnared in the options-backdating scandal, in which companies manipulated the dates that options were awarded to provide additional compensation to executives.  More than 130 companies have come under scrutiny by the SEC, and many of those are being investigated by the Justice Department.