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Deadline Passed for Avista Class Action Lawsuits
The lead plaintiff deadline was last week for class action lawsuits on behalf of Avista Corp.'s stockholders who may have lost money after the company reported a loss of $22 million in the second quarter. The losses followed unhedged power trades in the forward market in the second quarter.
In June, Avista acknowledged that one of its energy traders had entered into excessive levels of short-term, fixed-price power contracts. The trader then allegedly committed suicide after the transactions were revealed (see NGI, June 26).
Several class action lawsuits were filed in July (see NGI, Aug. 7), and Spector, Roseman & Kodroff P.C. of Philadelphia was one of the last to file last week, alleging that statements made by Avista's president and CEO that "Avista Utilities did not generally hold energy commodity instruments for speculative trading purposes, but rather engaged in trading energy commodity instruments contracts to hedge against price fluctuations associated with the management of resources was false."
The lawsuit also alleges that the defendants' statements regarding "among other things, the purported 'strong performance' of the Avista Utilities unit were misleading" because they omitted facts about the company's short position and the "many millions of dollars it would cost the company to cover the position."
There is no word yet on when a court will be assigned to review the lawsuits, however, it was expected to take several months. Avista had no comment.
Carolyn Davis, Houston
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