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ArthroCare Enters Into Deferred Prosecution Agreement
Medical-device maker ArthroCare Corp. (ARTC) said Tuesday it has entered into a deferred prosecution agreement to resolve a years-long U.S. Department of Justice investigation into allegations of a $400 million securities fraud scheme.
As part of the agreement, ArthroCare said it agreed to pay a $30 million fine to the Justice Department and to maintain a compliance program that it must report on annually to the Justice Department.
The probe was first announced in December 2008 and focused on allegations of securities and related fraud committed under a previous management team, the Austin, Texas-based company said.
Last year, former ArthroCare senior vice presidents John Raffle and David Applegate pleaded guilty to conspiracy to commit securities and wire fraud in connection with the fraud scheme, according to the Justice Department.
Mr. Raffle admitted to falsely inflating ArthroCare's sales by parking millions of dollars worth of ArthroCare's products with its distributors at the end of two quarters in 2007 and 2008, the Justice Department said in July.
On Tuesday, the Justice Department said the company's former chief executive, Michael Baker, and former chief financial officer, Michael Gluk, are scheduled to stand trial on related charges on May 5.
Shares of the company rose 11% to $45.00 in recent after hours trading. Through Tuesday's close, the stock has risen 14% over the last 12 months.
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(END) Dow Jones Newswires 01-07-141815ET Copyright (c) 2014 Dow Jones & Company, Inc.