Spokane, WA: (Jun-09-07) Investors filed a class action lawsuit against Avista Corp., alleging that the company and senior executives engaged in fraud and other securities law violations. The lawsuit was filed by several plaintiffs on behalf of all shareholders who purchased stock between Nov. 23, 1999 and Aug. 13, 2002. It was dismissed by a judge, but then re-filed in 2005. The original suit, filed in Sept. 2002, reached settlement that is pending approval of US District Judge Fred Van Sickle of Spokane.
Though Avista denied the core allegations of the lawsuit, that it failed to disclose its role in electricity trades between Enron Corp. and Portland General Electric, an Enron subsidiary at the time, it however, did agree to a financial settlement. The suit followed a tumultuous time when Avista's utility unit lost more than $100 million on energy trades.
Plaintiffs alleged that the actions of executives and the company artificially inflated the company's stock price. It had traded at $66 a share in January of 2000 but sank to $11 a share that summer. As part of the settlement agreement, Avista Corp. agreed to a $9.5 million payout to resolve the class action claims. The settlement amount would largely be covered by the company's insurance carrier, though Avista is responsible for paying a $1 million deductible. The settlement would erase claims against the company as well as against former chairman and CEO Thomas Matthews, the brash Texan hired in 1998 who moved quickly to drastically cut the company's dividend payments, rename the venerable Washington Water Power as Avista, and guide the company into the deregulated electricity markets. [SPOKESMAN REVIEW: AVISTA SETTLEMENT]
