NEW YORK, Nov. 22, 2002 (PRIMEZONE)-- A class action lawsuit alleging securities fraud has been filed in the United States District Court for the Northern District of Texas (Dallas Division) against TXU Corp. ("TXU" or the "Company") (NYSE:TXU) and two of the Company's senior officers. The case was filed by Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) on behalf of investors who purchased or otherwise acquired the securities of TXU during the period from April 25, 2002 and October 11, 2002 (the "Class Period").
The Complaint alleges that, throughout the Class Period, defendants represented that the Company was on track to earn $4.35 to $4.45 per share for 2002 and $4.80 to $4.90 per share for 2003; that despite difficult conditions in its British operations, the Company was positioning itself for future growth in the U.K. energy trading and retail markets; and that the Company's $0.60 quarterly dividend was safe. Defendants made these representations despite having no reasonable basis to do so in that the Company lacked adequate internal controls and had deficiencies in its planning and budgeting systems, rendering it incapable of ascertaining the true extent of the deteriorating condition of its operations in the U.K. As a result of these misrepresentations, the market price of the Company's securities was artificially inflated during the Class Period. Due to this, defendants were allegedly able to take advantage of the artificial inflation in the price of the Company's securities by selling over $1 billion of common stock and equity-like securities known as FELINE PRIDES.
Before the market opened on October 4, 2002, TXU issued a statement disclosing the seriousness of the problems in the U.K. business, including customer attrition and lower wholesale electricity prices, and significantly lowering its earnings guidance for 2002 and 2003. On this news, the Company's stock price declined to $27 per share, from more than $40 per share the prior week. However, the Company's stock continued to trade at artificially inflated prices as defendants concealed the severe liquidity and credit problems it was experiencing due to the U.K. situation. Defendants even assured the market that the Company was strong financially and that its dividend was "secure." Then, on October 14, 2002, before the market opened, TXU announced that it was slashing its dividend by 80%, to $0.125 per share and would no longer support its European operations. The Company's stock price plunged $5.81, or 31%, to close at $12.94 on volume of 39 million shares.
If you purchased the securities of TXU during the Class Period, you have until December 16, 2002 to ask the Court to appoint you as lead plaintiff for the Class. In order to serve as lead plaintiff, you must meet certain legal requirements. If you wish to review a copy of the Complaint, or if you would like to discuss this action or have any questions, please contact Andrew G. Tolan, Esq. of the Pomerantz firm at 888-476-6529 (or (888) 4-POMLAW), toll free, or at agtolan@pomlaw.com by e-mail. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca