The U.S. governments first attempted prosecution under Sarbanes-Oxley has ended in failure.
Richard Scrushy, 52, former CEO of healthcare company Healthsouth, walked free from a federal courthouse yesterday after being acquitted of 38 charges of fraud.
Scrushy's charges related to a multi-billion dollar scheme that added false profits Healthsouth's accounts. He was cleared after convincing the jury he was unaware of the financial irregularities, which were privy only to the finance department.
The case comes as a blow to U.S. prosecutors who believed they had a cast-iron test case for Sarbanes-Oxley. The legislation puts the onus on board members to regulate their companies in a financially sound manner and was a direct response to the Enron and Worldcom scandals at the turn of the millennium.
"We went from 85 counts to zero. There are a lot of wrongs that need to be made right and I look forward to seeing that happen," said Scrushy in an interview with the Financial Times.
In April SC reported companies could avoid a Sarbanes-Oxley headache by using encryption technology.