ArthroCare may have knowingly misrepresented and overstated revenues allowing insiders to sell $20,000,000 worth of stock at artificially inflated prices.

Investigation and pending class action lawsuit against ArthroCare Corporation on behalf of all persons or entities who purchased the common stock of ArthroCare Corporation between August 4, 2006 and January 23, 2008 inclusive.

The class action complaint alleges that Arthocare knowingly or recklessly made a series of material misrepresentations concerning ArthroCare's business and financial results. Specifically, ArthoCare materially overstated revenues due to the improper inclusion and recognition of revenue attributable to purported “purchases” of medical devices by DiscoCare, Inc., an ArthroCare “sales agent” for the sale of ArthroCare medical devices. More specifically, defendants violated Generally Accepted Accounting Practices ("GAAP") in numerous material respects by:

(i) recognizing revenue where payment for the shipment of ArthroCare’s products was not unconditional, but was entirely contingent upon the decision of third-party payers to pay for the ArthroCare device or the successful resolution of personal injury lawsuits;

(ii) recognizing revenue from transactions with DiscoCare where DiscoCare did not have an unconditional obligation to pay ArthroCare for certain products;

(iii) recognizing revenue from bill and hold transactions between the Company and DiscoCare involving certain products which were to be paid for pursuant to the contingent payment arrangement; and

(iv) materially overstating financial results due to the improper inclusion and recognition of revenue attributable to purported “purchases” of medical devices by a related party, Device Reimbursement Services (“DRS”).

Moreover, Arthocare and employees of ArthroCare profited handsomely from those misrepresentations, selling more than $20 million of ArthroCare stock during the Class Period.