Deal Is Reached in Aetna Investor Suit
Aetna Inc. has reached a tentative settlement with investors who accused the company of hiding accounting misstatements when Securities and Exchange Commission Chairman William H. Donaldson led the company, an Aetna spokesman said Wednesday.
The agreement must be approved by U.S. District Judge George Daniels in New York, said Aetna spokesman David Carter.
Carter declined to say how much the Hartford, Conn.-based insurer is paying to settle the case.
“What we saw here was an opportunity to settle a nuisance and to eliminate the ongoing costs of litigation,” he said.
Aetna shares rose $1.50 to $126.20 on the New York Stock Exchange.
Donaldson, who was named in the initial suit, said he was told “that the suit no longer names me.”
There are no court records indicating that Donaldson has been dismissed yet.
From February 2000 to April 2001, Donaldson was chairman of Aetna, now the No. 3 U.S. health insurer. The suit claimed that Donaldson knew Aetna had “material problems” establishing adequate reserves to cover medical costs.
Donaldson and current Chairman John Rowe hid the problems in Aetna’s regulatory filings and press releases, the suit said.
Michael Carroll, a lawyer for Donaldson, Rowe and Aetna, and investor lawyers Salvatore Graziano and Sandy Liebhard didn’t return telephone calls seeking comment.
The complaint alleged civil fraud violations and sought undetermined damages and class-action status on behalf of investors who suffered losses.
The lead plaintiffs were three investors: Goldplate Investment Partners Ltd, Laborers Tri-County Pension Fund and Shiela Shafran, who collectively bought more than $450,000 worth of Aetna stock in 2000 and 2001.
Donaldson, 73, has led the SEC since February 2003. He is a Yale-educated former Marine who served in the Nixon and Ford administrations from 1973 to 1975 and founded the Yale School of Management.
Donaldson also is a former chairman of the New York Stock Exchange and a co-founder of now-defunct investment bank Donaldson, Lufkin & Jenrette.
