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Member, Beacon International Group, Ltd.
MINNEAPOLIS--The California Public Employees' Retirement System will be the lead plaintiff in the shareholder class action lawsuit against UnitedHealth Group Inc. and its executives over the company's practice of backdating stock options for executives, says plaintiffs law firm Lerach Coughlin Stoia Geller Rudman & Robbins L.L.P.
San Diego, Calif.-based Lerach, the lead counsel in the lawsuit, says CalPERS, the nation's largest pension fund, will seek billions of dollars of alleged investor losses and disgorgement of hundreds of millions of dollars of insider trading profits. Besides Minnetonka, Minn.-based UnitedHealth, the lawsuit names various company executives, including Chief Executive Officer William W. McGuire.
The lawsuit, filed in federal district court in Minneapolis, Minn., also seeks nonmonetary relief, including corporate governance reforms. In addition, the plaintiffs also are demanding that the defendants bear their own legal costs.
In May, UnitedHealth admitted "significant deficiencies" in how the company had granted and accounted for stock options to its executives and that it would likely have to restate its financial results for the past three years to eliminate hundreds of millions in profits. It also revealed that federal securities officials and a grand jury were investigating its stock options practices.
During the class period, UnitedHealth's share price fell by more than one-third its value, according to Lerach.
The lawsuit alleges that the artificial inflation of UnitedHealth's stock allowed its top officers to reap hundreds of millions of dollars through insider trading and that the falsification of the company's financial statements contributed to huge bonuses for the executives. At the same time, UnitedHealth's shareholders' stock was improperly diluted as "executives received millions in stock options at lower option prices than they were entitled to," states a press release from Lerach.