AUSTIN (CN) – ArthroCare executives unloaded about $12 million in personal holdings while the medical device company restated its earnings to correct for previously inflated revenue, which caused shares to plunge 42 percent, shareholders claim in Federal Court.
A class action accuses company officials of overstating revenue from 2006 to 2008 by as much as $37 million, because they improperly recognized income from DiscoCare Inc., Boracchia & Associates and Clinical Technology.
Last week, it drew the attention of the Securities and Exchange Commission, which decided to look into the company’s financial statements. As a result of the inquiry, ArthroCare restated its earnings going back to 2006, causing the price of stock to nosedive.
Plaintiffs are represented by Gravely & Pearson of San Antonio.