PHILADELPHIA, June 14, 2002 (PRIMEZONE) -- On May 21, 2002, the law firm of Berger & Montague, P.C. (http://www.bergermontague.com) filed a class action suit against Reliant Resources, Inc. ("Reliant") (NYSE:RRI) and certain of its principal officers and directors in the United States District Court for the Southern District of Texas on behalf of all persons or entities who purchased Reliant stock on or traceable to Reliant's initial public offering of 52 million common shares at $30 per share on May 1, 2001 ("IPO").
The Complaint alleges claims arising under Sections 11 and 15 of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. Section 77(k) and (o), on behalf of a class of the purchasers of Reliant common stock on or traceable to the initial public offering of 52 million common shares at $30 per share on May 1, 2001 ("IPO"), pursuant to a Registration Statement and Prospectus dated May 1, 2001 ("Prospectus"). Part of Reliant's business involved wholesale energy trading. On May 13, 2002, Reliant disclosed that it had been conducting "round-trip" trades in which it bought and sold power in simultaneous trades at the same price and amount. This conduct manipulated the market for energy by making the market appear more active than it was and by making Reliant's business appear more substantial than it actually was. Such trades were conducted solely to generate volume in order to make Reliant appear to be a bigger player in the wholesale energy market and achieve a higher ranking in the quarterly sales rankings of power traders. The Federal Energy Regulatory Commission ("FERC") requires wholesale electricity marketers to file quarterly reports of transactions, including the size, location and names of their trading partners, which reports are used by trade publications to compile rankings of top traders. A high ranking indicated that Reliant was well-equipped to handle large transactions, to attract more traders and to win long-term supply contracts with large utility customers. Energy traders sought out a high ranking because it made them a more desirable business partner. Reliant ranked second on the list of power marketers in the fourth quarter of 2001, but without the "round-trip" trades, which Reliant admitted totaled 78 million megawatt hours in 2001, or 1/5 of reported volume, it would have only ranked seventh.
The "round-trip" or phantom trades improperly inflated Reliant's revenues by approximately 10% during the period from 1999 through 2001. Reliant admitted that it engaged in "round-trip" trades of 30 million megawatt hours (MWH) in 1999 or approximately 26% of the 112 million MWH reported in the Prospectus for the year ended December 31, 1999, and 30 million MWH in 2000 or approximately 14% of the 201 million MWH reported in the Prospectus for the year ended December 31, 2000. The Prospectus contained materially false and misleading representations of the volume of Reliant's energy trading as well as Reliant's revenues.
When Reliant's participation in the "round-trip" trades was finally disclosed, the price of Reliant's stock dropped to a low of $8.43 on May 14, 2002.
The law firm of Berger & Montague, P.C. has over 50 attorneys, all of whom represent plaintiffs in complex litigation. The Berger firm has extensive experience representing plaintiffs in class action securities litigation and has played lead roles in major cases over the past 25 years which have resulted in recoveries of several billion dollars to investors. The firm has represented investors as lead counsel in actions against Rite Aid, Sotheby's, Waste Management, Inc., Sunbeam, Boston Chicken and IKON Office Solutions, Inc. The standing of Berger & Montague, P.C. in successfully conducting major securities and antitrust litigation has been recognized by numerous courts. For example:
"Class counsel did a remarkable job in representing the class
interests." In Re: IKON Offices Solutions Securities Litigation.
Civil Action No. 98-4286(E.D.Pa.) (partial settlement for
$111 million approved May, 2000).
"...(Y)ou have acted the way lawyers at their best ought to act.
And I have had a lot of cases...in 15 years now as a judge and I
cannot recall a significant case where I felt people were better
represented than they are here ... I would say this has been the
best representation that I have seen." In Re: Waste Management,
Inc. Securities Litigation, Civil Action No. 97-C 7709
(N.D. Ill.) (settled in 1999 for $220 million).
If you purchased Reliant stock on or traceable to the IPO, please visit our website at www.bergermontague.com to view the complaint and join the class action or if you have any questions concerning this notice or your rights with respect to this matter, please contact:
Sherrie R. Savett, Esquire
Barbara A. Podell, Esquire
Kimberly A. Walker, Investor Relations Manager
Berger & Montague, P.C.
1622 Locust Street
Philadelphia, PA 19103
Phone: 888-891-2289 or 215-875-3000
Fax: 215-875-5715
Website: http://www.bergermontague.com
e-mail: InvestorProtect@bm.net
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca