Union Asks SEC to Open Tenet Probe
Nov. 21, 2002
%mlink(STRY:; PHOTO:; AUDIO:%)
WASHINGTON (AP) _ The American Federation of State, County and Municipal Employees, or AFSCME, asked the Securities and Exchange Commission to open a formal investigation into Tenet Healthcare Corp. regarding the release of allegedly misleading and incomplete information to shareholders and insider trading activity shortly before negative news was made public.
Earlier this week, Tenet Healthcare, based in Santa Barbara, Calif., disclosed that the SEC ``opened an informal file'' into the heavy stock trading volume that preceded company announcements, and the circumstances surrounding a large stock sale on Oct. 4 by former Chief Operating Officer Thomas Mackey.
Tenet's troubles don't end there. The hospital operator is facing questions about its outlier payments, which Medicare pays to defray costs of the most expensive cases.
There's also a federal investigation into allegations that two doctors who practice at a Tenet hospital in Redding, Calif., performed unnecessary heart surgeries and other invasive procedures.
In a press release Thursday, AFSCME said its complaint alleges that Tenet failed to adequately disclose ``the risky nature of its unsustainable and aggressive pricing strategies,'' as well as the portion of its Medicare revenue received as Medicare outlier payments.
AFSCME also called for a formal investigation into Tenet's ``suspicious'' insider trading, specifically insider sales made between Oct. 2 _ when UBS Warburg analyst Kenneth Weakley began making inquiries of management regarding outlier payments _ and Oct. 28, when Weakley issued his report.
New York Stock Exchange-listed Tenet shares closed Thursday at $17.26, down 59 cents, or 3 percent. The stock hit a 52-week high of $52.50 on Oct. 3 and a 52-week low of $13.70 on Nov. 11.