PHILADELPHIA, Aug. 9, 2002 (PRIMEZONE) -- The law firm of Spector, Roseman & Kodroff, P.C. announced that they have filed a class action lawsuit in the United States District Court for the District of Minnesota against defendants Xcel Energy, Inc. ("Xcel" or the "Company") (NYSE:XEL), James J. Howard, Wayne H. Brunetti and Edward J. Mcintyre, on behalf of purchasers of the stock of Xcel during the period from January 31, 2001 and July 26, 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 between January 31, 2001 and July 26, 2002, thereby artificially inflating the price of Xcel Energy securities. Throughout the Class Period, as alleged in the complaint, defendants issued numerous statements and filed quarterly and annual reports with the Securities & Exchange Commission ("SEC") which described the Company's financial performance and the financial performance of NRG Energy, Inc. ("NRG"), the Company's majority-owned subsidiary. As alleged in the Complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (a) that the Company had engaged in "round-trip" energy trades that provided no economic benefit for the Company; (b) that Xcel's and NRG's credit agreements with lenders contained cross-default provisions and covenants, the result of which was that in the event of a default by NRG, among other adverse effects, Xcel would lose access to $800 million in credit; (c) that the Company lacked the necessary internal controls to adequately monitor the trading of its power; and (d) that as a result, the value of the Company's revenues and financial results were materially overstated at all relevant times.
On July 25, 2002, Xcel issued a press release announcing its financial results for the second quarter, the period ended June 30, 2002, and disclosed that its earnings had declined and that it was revising its earnings expectations for fiscal 2002. In a conference call the next day, defendants disclosed the true extent of Xcel's liquidity and credit difficulties and its management's inability to effectively remedy such difficulties stemming from the operations of NRG. As reported in several business articles dated July 26, 2002, analysts were horrified to learn that the liquidity and credit difficulties extended to Xcel itself under the "cross-collateral default" provisions Xcel and NRG had entered into with lenders.
On July 26, 2002, Xcel stock closed at $7.55, a more than 36% one-day decline, on extremely heavy trading volume. Subsequently, on July 28, 2002, defendants disclosed that Xcel was being investigated by the SEC, among other regulators, for engaging in "round-trip" or "wash" transactions, which involve the simultaneous buying and trading of power at the same price and same amount and provide no economic benefit to the Company.
If you purchased Xcel Energy securities during the Class Period, you may, no later than September 30, 2002 move to be appointed as a Lead Plaintiff in this class action. A Lead Plaintiff is a representative, chosen by the Court, that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest," and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth. If you have sustained substantial losses in Xcel Energy securities during the Class Period, please contact Spector, Roseman & Kodroff, P.C. at classaction@srk-law.com for a more thorough explanation of the Lead Plaintiff selection process. If you have relatively small losses, your ability to participate in any recovery will be protected by the Lead Plaintiff(s), and you need take no affirmative steps at this time.
If you wish to join this action, please visit http://www.srk-law.com/dbjoinaclassaction.asp. If you would like to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel Robert M. Roseman toll-free at 888-844-5862 or via E-mail at classaction@srk-law.com. For more detailed information about the firm please visit its website at http://www.srk-law.com.
Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pennsylvania and San Diego, California, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws, and consumer fraud. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered on behalf of thousands of defrauded shareholders and companies.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca