Inquiry in backdating scandal broadens

Federal prosecutors announced they are investigating stock options grants at pharmacy benefits manager Caremark Rx, as the corporate backdating scandal gains speed. Shares of UnitedHealth Group fell 3.4 percent yesterday after the company revealed that it is the object of a probe by federal prosecutors. The Wall Street Journal comments: "The entry of the U.S. attorney's office in Manhattan, considered among the most experienced in prosecuting white-collar crimes, signals a significant ratcheting up."

- see this article from the Wall Street Journal (sub. req.)

PLUS: The news of UnitedHealth's latest legal problems appeared to demoralize Wall Street analysts, who had largely been hanging tough. "The company's stock [will] likely weaken [on] this news," says Bank of America analyst Joseph France, "which means that both the intensity and the length of this inquiry could be considerably worse than once expected." Article

ALSO: Meanwhile, the run of legal woes for the industry continues, as the Justice Department announces that it has a problem with the rates Abbott Laboratories and spin-off Hospira (hospital products) charged Medicare and Medicaid for more than a decade. Article

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