DETROIT, June 25, 2002 (PRIMEZONE) -- A pending shareholder lawsuit claims CMS Energy Corporation (NYSE:CMS) and three top officers, used improper accounting practices to artificially inflate revenues, Berman DeValerio Pease Tabacco Burt & Pucillo said today.
The complaint was filed June 3, 2002 in the U.S. District Court for the Eastern District of Michigan. It seeks damages for violations of federal securities laws on behalf of all investors who bought CMS common stock from August 3, 2000 through and including May 10, 2002 (the Class Period).
Berman DeValerio has represented investors in class actions for 20 years. To review the complaint and learn more about becoming a lead plaintiff, please visit the firm's website at www.bermanesq.com.
According to the lawsuit, CMS and three of its top executives engaged in "round-trip" energy trading to artificially boost earnings. Round-trip trading refers to the practice whereby two companies buy and sell the same amount of power at the same price and at the same time, resulting in a financial "wash" for both companies. The complaint says these trading practices lacked any economic substance and were used by CMS to improperly record approximately $4.4 billion in revenue and to manipulate the market into thinking CMS was a significant player in the power marketing industry.
On May 9, 2002, the truth about CMS trading practices began to emerge when a news report revealed that CMS had engaged in round-trip trading with Dynegy, Inc. The news for shareholders grew worse on May 10, when CMS announced that the U.S. Securities and Exchange Commission had begun an informal inquiry into CMS round-trip trading activities. Then, on May 13, Reliant Resources, Inc. stated that it had also conducted round-trip trading with CMS. CMS has confirmed such trading with both companies.
On May 15, CMS disclosed that its energy-marketing unit had "entered into 'round trip' electricity trades ... from May 2000 through mid-January 2002. Thirteen of the trades accounted for about 98 percent of the volume." The complaint says a former partner at the accounting firm Deloitte & Touche told Reuters: "Recording revenues from round-trip trades would be a species of fraud because they're overstating revenues." On May 24, CMS announced the resignation of its Chairman and CEO.
The market reaction to the news was swift and severe. CMS stock fell from a high of $20 per share on May 10, 2002 to a low of $15.72 on May 13, 2002, a one-day decline of more than 21% and a fall of more than 45% from the Class Period high.
If you purchased CMS Energy Corporation common stock during the period from August 3, 2000 through May 10, 2002, you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests.
Julie A. Richmond, Esq. Michael G. Lange, Esq. Jeffrey C. Block, Esq. One Liberty Square Boston, MA 02109 (800) 516-9926 law@bermanesq.com
You may also visit the firm's website at www.bermanesq.com.
If you wish to apply to be lead plaintiff in this action, a motion must be filed on your behalf with the court no later than July 16, 2002. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action. You may also retain counsel of your choice. To be a member of the class, however, you need not take any action at this time.
Berman DeValerio Pease Tabacco Burt & Pucillo (www.bermanesq.com) prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations and consumer fraud. The firm consists of 34 attorneys in Boston, San Francisco and West Palm Beach, Florida.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.