UnitedHealth Group's founder and CEO, Dr. William McGuire, resigned as board chairman on Oct. 15 after an external review found that many of his stock options were likely backdated. Even with that very big signal it took the SEC two full months before they upgraded to an investigation. (A Congressional oversight investigation should be pending.)
McGuire agreed to leave as CEO by Dec. 1, turning duties over to the UnitedHealth’s president, Stephen Hemsley. This allowed Dr. McGuire approximately six more weeks with his hands on the steering wheel when there was nothing but negative controversy surrounding his options. That having been said, if the SEC does show up with a broom it should be a big one. Otherwise the stench will linger and suspicion will lurk in every footnote.
To those who say the SEC staff is overwhelmed with the options backdating quandary that the market finds itself in: hire temporary private sector staff from law and accounting firms. We have a problem if the bad guys get away without any serious consequences. The SEC cannot become the financial keystone cops.
UNH 1-yr chart: