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.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.