WASHINGTON − Apple’s stock-option granting practices may be the highest-profile case under investigation by the Securities and Exchange Commission, but the inquiry into UnitedHealth Group’s practices is certainly the biggest in the healthcare industry.
Following an informal inquiry from the SEC last April, the nation’s second-largest insurer is under formal investigation of its stock options practice.
The inquiry follows the resignation of the Minnetonka, Minn.-based company’s founder and CEO, William McGuire, MD, who was forced out as board chairman in mid-October after an external review revealed that his stock options had been illegally backdated.
Don Nathan, spokesperson for UnitedHealth Group, said the company is “cooperating fully with the SEC and all regulators.” While there is no timetable for when the investigation will end, he said the company will continue to “focus on customers and delivering on the business” with its new president, Stephen Hemsley.
Nathan said the inquiry is not industry-specific. “This is not a healthcare issue per se,” he said. “There are more than 150 companies in the tech sector that are the subject of informal inquiries regarding stock options.”
Mohit Ghose, vice president of public affairs for Washington-based America’s Health Insurance Plans, said the national association of health insurance plan companies has not made any statement regarding UnitedHealth Group’s situation.
Backdating executive stock option grants involves putting a date on a document that precedes the actual date. While it’s not automatically illegal, a number of things have to be in place to keep it legal. No documents can be forged, company shareholders must be informed, and backdating also must be properly reflected in the company’s earnings and tax returns.