Former CEO acquitted in first SOX prosecution

Richard Scrushy, the first man to ever be tried under the Sarbanes-Oxley business compliance law in the US, has been acquitted of all 36 charges, including securities fraud and conspiracy.

Scrushy, former CEO of healthcare firm HealthSouth, was yesterday cleared of engineering a multimillion-dollar company-wide fraud scheme, after a trial that lasted almost five months and took place in Alabama.

US legislators passed the law to stop business leaders committing accountancy fraud in the wake of the Enron and WorldCom scandals. Under Sarbanes-Oxley, CEOs are expected to provide assurance that their accountancy practices are accurate.

Prosecutors accused Scrushy of adding false profits of $2.7bn to the company's accounts over a six-year period, and taking $200m from the sale of company shares at inflated prices.

According to an article in the Financial Times, when Scrushy left the court he said: "God is good. We went from 85 counts to zero. There are a lot of wrongs that need to be made right and I look forward to seeing that happen."

During the case, five chief financial officers who worked with Scrushy admitted to financial fraud and said the former CEO was involved.

Scruchy's main line of defence was that fraud occurred in the finance department without his knowledge.