REGULATORY ENFORCEMENT

SEC FILES TO REVIVE SUIT AGAINST HEALTHSOUTH FOUNDER

WASHINGTON – The Securities and Exchange Commission revived a lawsuit against HealthSouth founder Richard Scrushy, despite his acquittal last week on criminal charges in a $2.7 billion earnings overstatement.

In court papers filed yesterday, the SEC said that its case raises issues distinct from those pursued by the Justice Department. The agency also cited the lower burden of proof that it must meet in order to support allegations that Mr. Scrushy orchestrated and personally profited from a massive accounting fraud from 1999 through 2002. U.S. District Judge Inge Johnson put the case on hold more than two years ago while federal prosecutors pursued the criminal case. The SEC at the time said that it was seeking $786 million, plus interest, from Mr. Scrushy and to bar the former executive from serving as an officer or director of a public company.

– Dow Jones Newswires

WALL STREET

MORGAN STANLEY TO GIVE PURCELL $44 MILLION GOLDEN PARACHUTE

Morgan Stanley will pay its former chairman and CEO, Philip Purcell, about $44 million in cash after he agreed to step down from the world’s biggest securities firm, ending a 2 1/2-month effort by shareholders and dissident alumni to oust him. “It seems like a heck of a lot of money for someone who had that much pressure on him to leave,” said Kenneth Crawford of Argent Capital Management in St. Louis.

Mr. Purcell’s package ranks among Wall Street’s biggest golden handshakes. Former Citigroup co-CEO John Reed stood to receive at least $2.7 million a year when he left in 2000. This May, Morgan Stanley agreed to pay Joseph Perella and Terry Meguid $6.4 million each when they quit as the firm’s top two investment bankers.

Mr. Purcell also stands to receive $62.3 million in deferred compensation and pension benefits, according to Morgan Stanley’s last proxy filing in February.

– Bloomberg News

ECONOMY

WAL-MART, RETAILERS POST BIGGEST GAIN IN 13 MONTHS

American retailers from Wal-Mart Stores to Nordstrom posted their biggest sales gain in 13 months in June as warmer weather and job growth spurred purchases of air conditioners and summer clothing.

Sales at stores open at least a year jumped 5.3%,the International Council of Shopping Centers said yesterday, as most chains beat analysts’ estimates. Wal-Mart had a 4.5% sales gain, higher than expected. J.C. Penney boosted its second-quarter profit forecast after a 7.4% gain. Luxury retailer Saks’s sales climbed 6% and Nordstrom saw an 8.1% increase. Gap posted a 3% increase at its North American stores.

– Bloomberg News