ATLANTA, Nov. 27, 2002 (PRIMEZONE) -- Chitwood & Harley announces that it has filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of purchasers of the securities, and options on the securities of Allegheny Energy, Inc. ("Allegheny Energy" or the "Company") (NYSE:AYE) between April 23, 2001 and October 8, 2002, inclusive, (the "Class Period"), against defendants Allegheny Energy and certain of its officers and directors.
If you wish to discuss this action or have any questions concerning this notice or your rights with respect to this matter, you may contact Nikole Davenport at 1-888-873-3999 (toll-free) or by e-mail at nmd@classlaw.com. A copy of the Complaint can be viewed on our website at www.classlaw.com. If you wish to serve as lead plaintiff, you must move the Court for appointment no later than December 20, 2002. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
On March 16, 2001, Allegheny Energy's subsidiary Allegheny Energy Supply Company, LLC ("Allegheny Energy Supply") announced that it completed its acquisition of Global Energy Markets ("G.E.M.") from Merrill Lynch & Co., Inc. ("Merrill Lynch"). The complaint alleges that Allegheny Energy made false and misleading statements during the Class Period in that it omitted to state that its revenues (and revenue guidance) materially depended, on illusory, revenue creating, "wash transactions" with Enron, and other deceptive energy trading practices. At no point did Allegheny Energy disclose to the investing public that: (i) the surge in its revenues was attributable to G.E.M.'s practice of engaging in deceptive and illusory trades; and (ii) that after the Enron story broke, Allegheny Energy could no longer engage in these deceptive trading practices as successfully, and that revenues would drop as a result.
On September 25, 2002, the Company sued Merrill Lynch for fraud and breach of contract related to the G.E.M. acquisition. In that lawsuit, Allegheny Energy alleged that it overpaid for G.E.M. because the unit's financial reports had been inflated by sham trades involving Enron. The Company admitted that G.E.M engaged in a significant amount of wash or round trip energy trades with Enron, and perhaps others. The Company further admitted that the effect of those trades was to artificially inflate revenues, trading volumes and growth rate.
The Company's September 25, 2002 admissions set a chain of events in motion, which would result in the Company's stock's tumble from a high of $12.85 on September 25, 2002 to $3.80 on October 8, 2002 -- a drop of $9.05, or 70%. On October 1, 2002, Moody's downgraded Allegheny Energy's credit to junk status. The Company, in a press release, reassured investors that this would not trigger any default or prepayment of the firm's debt. A week later, on October 8, 2002, the Company announced that it was in technical default under its credit agreements.
In order to serve as lead plaintiff, you must meet certain legal requirements which Chitwood & Harley would be happy to discuss with you. Chitwood & Harley is a class action law firm that represents victims of securities fraud and corporate mismanagement. Chitwood & Harley has been appointed lead counsel in major actions throughout the United States and has been instrumental in recovering billions of dollars on behalf of its clients. Clients and courts alike have praised the results achieved by Chitwood & Harley. Recently, the federal judge in: In re BankAmerica Securities Litigation, which resulted in a $490 million settlement, commented favorably on counsel's performance stating, "Class members were well served by experienced attorneys who, through considerable time and effort, obtained a significant recovery for their clients," and, "(a)s the Court has remarked throughout this litigation, class counsel ... have performed at exceptionally high levels, and all parties have been exceedingly well represented."
For more information about Chitwood & Harley, please visit our website at www.classlaw.com or contact Nikole Davenport at 1-888-873-3999 (toll-free), by e-mail at NMD@classlaw.com or at 1230 Peachtree Street, Suite 2300, Atlanta, Georgia 30309.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca