U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20860 / January 21, 2009

Accounting and Auditing Enforcement Release No. 2919 / January 21, 2009

SEC v. Urs Kamber, Stephan Husi and Richard Jon May, Civil Action No. 1:07-CV-01867 (JDB) (D.D.C.)

Former Centerpulse Head of Corporate Planning and Controlling Settles Fraud Charges With SEC

On January 21, 2009, the Securities and Exchange Commission announced that Stephan Husi, the former Head of Corporate Planning and Controlling of Centerpulse Ltd., agreed to settle the Commission's charges against him arising from his alleged involvement in the fraudulent inflation of Centerpulse's income in the third and fourth quarters of 2002. Without admitting or denying the Commission's allegations against him, Husi has consented to the entry of a final judgment in the Commission's litigation pending in the U.S. District Court for the District of Columbia. The final judgment, which is subject to approval by the Honorable John D. Bates, orders Husi to pay a $30,000 civil penalty, $14,216 in disgorgement, and $5,868 in prejudgment interest. The final judgment also bars Husi for five years from acting as an officer or director of any public company that has securities registered with, or is required to file reports with, the Commission, and permanently enjoins him from violating the antifraud and falsification of books and records provisions of the federal securities laws - Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act), and Exchange Act Rules 10b-5 and 13b2-1 - and from aiding and abetting violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws - Exchange Act Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B), and Exchange Act Rules 10b-5, 12b-20, 13a-1 and 13a-16.

As part of this settlement, and following the entry of the proposed final judgment against him, Husi (who holds a certificate as a Swiss Certified Expert for Accounting and Controlling) has consented, without admitting or denying the Commission's allegations against him, to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the Commission as an accountant, with the right to apply for reinstatement after five years.

The Commission's complaint alleges that Husi, along with two other former Centerpulse executives, (1) fraudulently inflated Centerpulse's third quarter 2002 income by improperly deferring recognition of a $25 million expense, refusing to write down $3.4 million in costs associated with an impaired asset, and approving $3.6 million in improper reserve adjustments; and (2) fraudulently inflated Centerpulse's fourth quarter and fiscal 2002 income by refusing to increase a reserve to cover at least $18 million in liabilities, improperly using anticipated refund credits to offset another $5 million in expenses, and again refusing to write down $3.4 million in costs associated with an impaired asset.

The Commission previously reached a settlement in this litigation with Urs Kamber, Centerpulse's former Chief Financial Officer. See Litigation Release No. 20605 (May 30, 2008) / Accounting and Auditing Enforcement Release No. 2835 (May 30, 2008). The Commission also previously reached administrative settlements with Dennis L. Hynson, CPA, Christopher W. Kelford and Paula J. Norbom, CPA, the former vice presidents of finance for Centerpulse's three U.S. divisions, who consented to the entry of cease-and-desist orders relating to improper accounting decisions they made during the third quarter of 2002. See Administrative Proceeding No. 3-13047 / Accounting and Auditing Enforcement Release No. 2832 / Release No. 57889 (May 30, 2008); Administrative Proceeding No. 3-13048 / Accounting and Auditing Enforcement Release No. 2833 / Release No. 57890 (May 30, 2008); and Administrative Proceeding No. 3-13049 / Accounting and Auditing Enforcement Release No. 2834 / Release No. 57891 (May 30, 2008).

The Commission's litigation against Richard May, the former group vice president of finance, tax counsel and treasurer of Centerpulse USA Holding Company, is ongoing. See Litigation Release No. 20336 (October 17, 2007) / Accounting and Auditing Enforcement Release No. 2741 (October 17, 2007).

http://www.sec.gov/litigation/litreleases/2009/lr20860.htm