Class Actions

IRUs, Resource Swapping, Insider Deals

Following is a partial list of current class action cases against energy and telcom corporations in the US. For a full listing, go here.

Adelphia Communications Corporation
Adelphia Communications Corporation manipulated its financial statements whereupon it misrepresented the Company's earnings and financial results, thereby artificially inflating the Company's stock price by improper accounting practices. More...

CMS Energy Corporation
CMS Energy Corporation 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. More...

Dynegy Inc
As alleged in the Complaint, Defendants entered into a series of secret financial transactions with shell corporations, referred to as 'Project Alpha,' which were actually disguised loan transactions, and which were used to artificially inflate Dynegy's reported cash flow operations by $300 million for the year 2001. More...

Excite@Home
Merrill Lynch & Co Inc and its former star Internet research analyst Henry M Blodget are charged with issuing misleading analyst reports about At Home Corporation, doing business as Excite@Home. The Complaint alleges that to maintain and enhance Merrill Lynch's investment banking relationships with Excite, defendants issued positive ratings on the Company which were materially misleading as they were inconsistent with their own contemporaneous, private adverse assessments of Excite. For example, defendants were repeatedly issuing a short term accumulate, long term buy rating on Excite despite Blodget's internal conclusion that Excite stock had a 'flat' outlook, was without any 'real catalysts' for improvement and was a 'piece of shit'. More...

Global Crossing Ltd
As alleged in the Complaint, the Company's purported revenue and earnings results were artificially inflated through accounting chicanery in violation of Generally Accepted Accounting Principles ('GAAP'). In essence, the Company entered into twenty to twenty-five year contracts, known as indefeasible right to use ('IRU'), and booked most of that twenty-year revenue up front in one lump sum. At the same time, the Company would purchase similar capacity in another area from the same carrier and then book those costs as a capital expense allowing it to show large revenue increases with little or no operating expenses. Defendants wrongfully failed to disclose such accounting maneuvers to the investing public. More...

Halliburton Company
The Complaint alleges that during the Class Period, defendants improperly recognized revenues in connection with Halliburton's long-term construction projects in violation of Generally Accepted Accounting Principles ('GAAP'). Beginning at least as early as the fourth quarter of fiscal 1998, the Company amended its accounting policies to report approximately $89 million of revenues to cover disputed cost overruns on long-term construction projects. The Company assumed that its customers would pay the disputed amounts, but never disclosed the change in accounting or the assumption of payment to the market. More...

Lucent Technologies Inc
The significance of Lucent's financial difficulties is highlighted by another lawsuit filed in the New Jersey Superior Court on December 13, 2000 by a former Lucent executive, which alleges that the Company was informed in a meeting on October 9, 2000, the day before the beginning of the Class Period, that its financial prospects were far worse than had been previously disclosed. Rather than responding appropriately to this news, the lawsuit alleges that Lucent retaliated against the former executive by forcing her to retire. More...

Qwest Communications International Inc
As alleged in the Complaint, Qwest, a broadband internet telecommunications company, essentially entered into swap contracts and improperly recognized revenues upfront in one lump sum. For example, it entered into contracts to 'sell' equipment, while simultaneously agreeing to buy from the same purchasers Internet services using the equipment it had just 'sold.' As alleged, adding to the suspect nature of these transactions was the fact that Qwest was a specialist in the very Internet services that it was agreeing to purchase. Plaintiff charges that Qwest's booking of revenues upfront in one lump sum violated GAAP and was contrary to industry practice. More...

Spyglass Inc
The Complaint alleges that defendants misrepresented that certain major contracts with key customers had been finalized when in fact these contracts had not been finalized. The revenues expected from these contracts, which are unlikely to materialize, had formed the basis for forecasts of first quarter profitability. As a result of these misrepresentations and material omissions, the price of Spyglass' common stock was artificially inflated throughout the Class Period. Prior to any public disclosure of Spyglass' problems, certain Spyglass insiders began to bail out of their investments during the last three months of 1998. The individual defendants took advantage of their inside knowledge to sell more than 500,000 shares of Spyglass getting proceeds exceeding $9.1 million during the Class Period. More...