NEW YORK, Nov. 7, 2002 (PRIMEZONE) -- Abbey Gardy, LLP commenced a Class Action lawsuit in the United States District Court for the Southern District of New York on behalf of a class (the "Class") of all persons who purchased securities of Allegheny Energy Inc. ("Allegheny Energy" or the "Company") (NYSE:AYE) between April 23, 2001 and October 8, 2002, inclusive (the "Class Period").
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period thereby artificially inflating the price of Allegheny Energy securities. The Complaint alleges that during the Class Period, defendants issued a series of materially false and misleading statements concerning Allegheny Energy's business and financial condition. Specifically, the complaint alleges that, on March 16, 2001, Allegheny Energy's subsidiary, Allegheny Energy Supply Company, LLC ("Allegheny Energy Supply"), announced that it had completed its acquisition of Global Energy Markets ("G.E.M.") from Merrill Lynch & Co., Inc. ("Merrill Lynch"). The complaint further alleges that Allegheny Energy made false and misleading statements during the Class Period, in that it failed to state that its revenues (and revenue guidance) materially depended upon illusory, revenue creating, "wash transactions" with Enron, and other deceptive energy trading practices.
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, among other things, 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. The Company further admitted that the effect of those trades was to artificially inflate revenues, trading volumes and growth rate.
On October 1, 2002, Moody's downgraded Allegheny Energy's credit to junk status. In a press release, the Company 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. Upon this news 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%.
Plaintiff seeks to recover damages on behalf of all those who purchased or otherwise acquired Allegheny Energy securities during the Class Period. If you purchased or otherwise acquired Allegheny Energy securities during the Class Period, and either lost money on the transaction or still hold the securities, you may wish to join in the action to serve as lead plaintiff. If you purchased Allegheny Energy securities during the Class Period, you may, no later than December 20, 2002, request that the Court appoint you as lead plaintiff.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiffs." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.
Abbey Gardy, LLP has been retained as one of the law firms to represent the Class. The attorneys at Abbey Gardy, LLP have extensive experience in securities class action cases, and have played lead roles in major cases resulting in the recovery of hundreds of millions of dollars to investors. If you would like to discuss this action or if you have any questions concerning this Notice or your rights as a potential class member or lead plaintiff, you may contact Nancy Kaboolian, Esq. of Abbey Gardy, LLP at (800) 889-3701 or email Nkaboolian@abbeygardy.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca