Updated: March 29, 2019
Status: Ongoing Case
On January 18, 2018, Labaton Sucharow was appointed co-lead counsel in a securities class action lawsuit on behalf the West Virginia Investment Management Board, against SCANA Corporation (SCANA) and certain of the company’s senior executives. The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule l0b-5 promulgated thereunder, on behalf of all persons or entities that purchased or otherwise acquired the publicly traded securities of SCANA between October 27, 2015 through December 20, 2017 (the “Class Period”). Lead plaintiffs filed an amended complaint on March 30, 2018. On March 29, 2019, the court largely denied defendants motion to dismiss.
SCANA provides electricity and natural gas to roughly 1.6 million customers in the Southeastern United States. In 2008, SCANA began constructing two new nuclear reactors at the V.C. Summer site near Jenkinsville, South Carolina. Throughout the Class Period, SCANA made false and misleading statements that the construction was progressing well. The plaintiffs also allege SCANA misrepresented that it was acting prudently when working on the nuclear project and, on that basis, successfully sought $1.7 billion in increased customer rates to offset construction costs.
According to the amended complaint, while SCANA was touting its progress, the company and its senior executives knew the project suffered from a host of fundamental problems. In November 2015, the defendants received an independent report from expert consultants that detailed formidable obstacles, massive cost overruns, and imprudent management. The 130-page report concluded that “there [were] significant issues facing the project,” including “plans and schedules [that] are not reflective of actual project circumstances” and an engineering design which “is not yet completed” and “not constructible.” However, the defendants continued constructing the plants, touting its purported progress, and charging increased rates for over a year.
In 2017, South Carolina Governor Henry McMaster publicly released the independent expert report that SCANA received. Soon thereafter, the U.S. Attorney’s Office in South Carolina and the FBI initiated a criminal investigation, and SCANA’s CEO and executive vice president left the company. The defendants have now abandoned the nuclear power plant project.
The case is In re SCANA Corporation Securities Litigation, No. 17-cv-2616 (D.S.C.). The lead plaintiffs are West Virginia Investment Management Board and Blue Sky. Labaton Sucharow represents lead plaintiff West Virginia Investment Management Board.