Investors investigation into The Southern Company’s accounting firm, Deloitte, and statements made in connection with the Kemper Plant. Is the lawsuit the logical continuation of the $87.5 million settlement with The Southern Company shareholders last year?
This post is opened for investors to gather facts, findings and track their exposure to related lawsuit. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.
A lawsuit was filed, we take the responsibility to update it as it goes.
The Southern Company files its annual report on Form 10-K with the U.S. Securities and Exchange Commission (SEC). The filing contains Deloitte & Touche LLP’s report as independent registered public accounting firm of Georgia Power Company (a wholly owned subsidiary of The Southern Company) and its involvement in the Plant Vogtle Units 3 and 4 Construction.
The lawsuit alleges that “Deloitte’s description of the detailed involvement it had with Southern on another energy project being constructed and audited at the same time as the Kemper Plant suggest[s] that Deloitte would have been similarly involved in Southern’s construction process at the Kemper Plant.”
The lawsuit further explains that “Deloitte’s acknowledgment that it audited the Kemper Project costs and its detailed description of what it does when auditing CAMs make clear that Deloitte would not only have known that Southern’s statements concerning that Kemper Plant were false and misleading, but that Deloitte prevented accurate information concerning the true status of the Kemper Project and its associated losses from timely reaching Southern’s shareholders.“See more on Factual Timeline
Plaintiff brings this federal securities class action against Deloitte & Touche, LLP and Deloitte, LLP on behalf of himself and on behalf of a class consisting of all persons and entities who purchased, acquired, or otherwise held, or sold, the publicly traded securities of The Southern Company between May 10, 2013 and February 20, 2020, inclusive.
According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:
(i) Deloitte was Southern’s auditor and had a duty to act as gatekeeper ensuring Southern’s accurate reporting of information to the investing public but instead violated its professional responsibilities, failed in its role of gatekeeper, and deceived investors about Southern’s accounting for and expected completion of the Kemper Plant;
(ii) Deloitte’s untrue statements and omissions of material facts concerning the Kemper Plant operated as a fraud and deceit upon plaintiff and others similarly situated in connection with their purchases and value of Southern securities during the class period.
See detailed allegations throughout the complaint.
The court issued an order appointing the lead plaintiff and lead counsel.
A securities class action lawsuit is a lawsuit on behalf of investors considered in a similar position, who purchased or sold securities of a company during a certain period and suffered losses because of an alleged wrongdoing. Security is often broadly defined to include bonds, stocks, options, derivatives, and other instruments.
Section 10b of the Securities Exchange Act of 1934 makes it unlawful to “use or employ, in connection with the purchase or sale of any security” a “manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). It is therefore forbidden to: employ any device, scheme, or artifice to defraud; make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made not misleading; or engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Generally, to be successful, the plaintiff must plead the following:
We invite you to read this article from the American Bar Association which, although from 2014, provide ample information to explore the world of class actions brought under section 10b of Securities Exchange Act of 1934.
Section 11 of the Securities Act of 1933 provides “an express right of action for damages . . . when a registration statement contains untrue statements of material fact or omissions of material fact.” (Thomas Lee Hazen, Treatise on the Law of Securities Regulation, §7.3 at 581 (4th ed. 2002)). Practically, buyers in an initial public offering (IPO), relying on the registration statement and prospectus, are given the right to file a complaint against the company and other signatories for losses sustained as a result of the deficient registration statement and prospectus.
Generally, at least four elements must be plead for the claim to survive:
A shareholder derivative lawsuit is a lawsuit brought by a shareholder of a company, on behalf of the company, against an insider (director, board of directors, executives) or a third-party to redress wrongs and harms to the company. Simply speaking, this mechanism exists because one cannot expect directors and insiders to sue themselves for harms they have done to the company.
The Private Securities Litigation Reform Act (PSLRA) of 1995 was enacted to tighten requirements for securities class actions to be brought in the United States. One of the mechanism put in place was a 60-day period, following the filing of the initial securities class action, for any shareholder considered in similar position to the one filing the initial class action complaint, to ask to be named lead plaintiff. Practically, any time a securities class action falling under the PSLRA is filed with a court, law firms advertise their willingness to pursue the case and invite other investors similarly situated to contact them.
The lead plaintiff in a securities class action is a shareholder who suffered losses related to the purchase or sale of a company’s security during a certain period of time, that is appointed with its choice of counsel to represent the rest of the similarly situated shareholders. To be appointed lead plaintiff, you need to contact a law firm, have them examine your losses and agree to be represented by them and ask to make a motion with the court to be appointed lead. The court will then look at all the motions from the different shareholders and make its decision based on a certain set of criteria. Your inability to be lead plaintiff shall not prevent you from any potential recovery in the event of a settlement.
A class period is a set period of time during which the purchasers or sellers of a company’s security claim in a class action lawsuit to have suffered losses. Class periods are based on the merits of the case and may evolve with the litigation.
A class action complaint will define the initial class of investors: the class period and the persons included in the class. You should look at the definition of the class to determine whether you are included or not. However, the class definition will evolve with the litigation. Its definition is very likely to change between the initial complaint filed and the possible settlement. Generally speaking, you should rely on the definitions of the class stated in a stipulation of settlement to determine whether or not you will be entitled to any recovery (see below about the opting-out mechanism).
You may. The mechanism is called opting-out of class. A lead plaintiff will agree on the potential recovery ratio in a settlement. You may have an interest in opting-out of a class if you have sustained large losses and believe bringing a separate lawsuit would entitle you to a larger ratio of recovery.
You may be able to bring a claim to arbitration in certain scenarios. We encourage you to contact a law firm of your choice to inquire about such alternative dispute resolution mechanism.
Largest class period is from:
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