Robbins Arroyo LLP: The Southern Company (SO) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against The Southern Company (NYSE: SO) in the U.S. District Court for the Northern District of Georgia, Atlanta Division. The complaint is brought on behalf of all purchasers of Southern Company securities between April 25, 2012 and October 29, 2013, for alleged violations of the Securities Exchange Act of 1934 by Southern Company’s officers and directors. Southern Company, together with its subsidiaries, engages in the generation, transmission, and distribution of electricity through coal, nuclear, oil and gas, and hydro resources in the states of Alabama, Georgia, Florida, and Mississippi. In 2006, Southern Company announced plans for its subsidiary, Mississippi Power, to build a “clean coal” plant in Kemper County, Mississippi (the “Kemper Plant”).
Southern Company Accused of Lying About Progress at Its Kemper Plant
According to the complaint, on April 25, 2012, Southern Company held a conference call for analysts, media representatives, and investors during which the company forecasted a summer 2013 startup date for the Kemper Plant. Southern Company officials also reassured investors that the Mississippi Public Service Commission had recertified the Kemper Plant the prior day and that the total project cost would not exceed the $2.88 billion cost cap set by state regulators. The company’s Chief Executive Officer Thomas A. Fanning subsequently stated, “[O]ur current analysis indicates that the overall cost to customers for [the Kemper Plant] will be less than projected in the original certification.” Southern Company continued to assure investors that the Kemper Plant was progressing in an “outstanding manner” and that the company would fully absorb the increased costs related to the Kemper Plant. However, the complaint alleges that Southern Company failed to disclose to investors that the company had encountered setbacks with the Kemper Plant and would not be able to complete it by the previously announced deadline.
On October 30, 2013, Southern Company disclosed an after-tax charge of $93 million related to increased cost estimates for the Kemper Plant and a delay of the in-service date to year-end 2014. In a conference call that same day, a Southern Company official admitted that the company “made a mistake on the engineering” and “agreed to price cap without having done fully our homework on the deal.” On this news, Southern Company’s stock declined approximately 2.4% to close at $40.91 per share on October 31, 2013. A May 14, 2016 article in The Wall Street Journal revealed that the U.S. Securities and Exchange Commission is looking into Southern Company’s financial controls and disclosures for the Kemper Plant. The article further detailed that a whistleblower from the Southern Company believes the company put a positive spin on construction of the Kemper Plant so that it wouldn’t have to admit that it was likely to lose federal subsidies due to delays. A July 2016 New York Times article stated that the company had “drastically understated the project’s cost and timetable, and repeatedly tried to conceal problems as they emerged.”
Southern Company Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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