U.S. Securities and Exchange Commission

Litigation Release No. 18843 / August 23, 2004

Accounting and Auditing Enforcement Release No. 2083 / August 23, 2004

Securities and Exchange Commission v. Kenneth K. Livesay, et al., United States District Court for the Northern District of Alabama, Civil Action No. CV-03-HS-0758-S

On August 19, 2004, the Honorable Virginia Emerson Hopkins, U. S. District Judge for the Northern District of Alabama, entered a Final Judgment as to defendant Kenneth K. Livesay (Livesay), formerly senior vice president, chief information officer and assistant controller of HealthSouth Corporation. The Final Judgment enjoined him from further violations of Section 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. Livesay was also permanently barred from serving as an officer or director of a public company. Livesay was not ordered to pay disgorgement and civil penalties in view of the forfeiture and fine ordered against him in the related criminal proceeding. Livesay consented to the entry of the judgment without admitting or denying any of the allegations of the Commission's Complaint.

The Commission's Complaint alleged that Livesay made or directed HealthSouth employees to make false accounting entries to inflate reported operating results in order to meet or exceed Wall Street earnings expectations.

See also: L.R. 18044 / March 20, 2003; L. R. 18059 / April 1, 2003; L. R. 18060 / April 1, 2003; AAER No. 1749 / April 1, 2003; L. R. 18070 / April 4, 2003; and L. R. 18339 / September 10, 2003; and AAER No. 2004 / May 10, 2004.

http://www.sec.gov/litigation/litreleases/lr18843.htm