NEW YORK, June 3, 2002 (PRIMEZONE) -- CMS Energy Corporation ("CMS" or the "Company") (NYSE:CMS) improperly recorded at least $4.4 billion from sham "round trip" trades of electricity. These transactions were of no economic value since CMS would sell a given amount of electrical energy at a certain price to another company on the wholesale electricity market, while simultaneously, the other company would sell back to CMS an identical amount of electrical energy at the same price. CMS would record the entire selling price as revenue, even though there was no actual profit to the Company, thereby misleading investors about the amount of revenue generated by CMS, the volume of its business, and also the liquidity of the wholesale electric market, according to allegations in a Complaint filed by Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) on behalf of purchasers of the securities of CMS during the period from August 3, 2000 through May 10, 2002, inclusive (the "Class Period).
The case was filed in the United States District Court for the Eastern District of Michigan. Defendants CMS and three of the Company's current or former senior officers are charged with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
Late in the day on May 10, 2002, the facts about CMS' misconduct began to emerge with the Company's announcement that the Securities and Exchange Commission ("SEC") had asked CMS to provide information about its "round trip" trades pursuant to an informal inquiry. As a result of this disclosure, the market price of CMS stock fell. On May 10, 2002, a Friday, the stock closed at $19.29. On the following Monday, May 13, 2002, the stock closed at $16.05
CMS finally acknowledged on May 15, 2002 that it had engaged in "round trip" trades over an 18-month period (May 2000 through mid-January 2002) and had improperly recognized $4.4 billion in revenues from such trades. The next day, the Company announced the resignation of Tamela W. Pallas, the head of its trading unit. Upon this disclosure, the price of CMS stock dropped further, closing at $15.25.
Thereafter on May 24, 2002, CMS announced that it would restate its financial statements for 2000 and 2001 to eliminate the impact of the "round trip" electricity trades that artificially inflated its revenue more than $4.4 billion. At that time, CMS also revealed that William T. McCormick Jr. was stepping down as its chairman and chief executive.
If you purchased the securities of CMS during the Class Period, you have until July 16, 2002 to ask the Court to appoint you as one of the lead plaintiffs for the Class. To serve as lead plaintiff, you must meet certain legal requirements. If you wish to review a copy of the Complaint, 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.
The Pomerantz firm, which has offices in New York and Chicago, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.
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