UPDATE 2-Sunrise executives leave after investigation

(Adds comments from shareholder group, analysts; updates stock price)

CHICAGO Dec 20 (Reuters) - Sunrise Senior Living Inc (SRZ.N), the subject of a government probe into insider stock sales and accounting practices, said on Thursday its president and two other executives had left the company after the conclusion of the fact-finding portion of an investigation by a special independent committee.

Shares of Sunrise, the biggest U.S. owner of assisted-living facilities, jumped as much as 14.5 percent on the news.

The company announced the departures of Thomas Newell, president since April 2000; Larry Hulse, chief executive of its insurance captive since August 2005 and a former chief financial officer; and Carl Adams, treasurer since November 2005 and a former chief accounting officer.

Sunrise, which is restating its earnings for 2003 to 2005, also said the net effect of adjustments arising from its findings was not likely to increase the previously disclosed restatement impacts.

This portion of the investigation primarily related to certain accruals and reserves. The committee's review of these issues found that inappropriate accounting occurred during the third quarter of 2003 through the fourth quarter of 2005.

The company said the committee will now consider appropriate measures pertaining to internal controls and processes over financial reporting. The panel will report to the board of directors and recommend improvements to processes and procedures.

SEIU Master Trust, a Sunrise shareholder, has been urging the Sunrise board of directors to delegate oversight of its internal investigation to the two new independent directors.

"Five of those seven independent directors served on the board during the period under investigation and four of those five appear to have been involved in some of the activities under investigation, including stock option grants, insider sales, and the company's accounting practices," SEIU said in a prepared statement.

Sunrise said it plans to file its 2006 Form 10-K no later than the New York Stock Exchange trading extension date of March 17, 2008.

Jeffries analyst Frank Morgan said he believes these actions suggest a near-term sale is unlikely.

"We believe the swift action taken by Sunrise's Board, plans to maintain its NYSE listing, and the fact that no update was provided on the evaluation of strategic alternatives suggest that a sale has become a less likely scenario in the near-term," he wrote in a research note.

Sunrise shares were up $2.54 at $30.45 at mid-afternoon on the the New York Stock Exchange. (Reporting by Debra Sherman; editing by Mark Porter, Lisa Von Ahn, Richard Chang)