On June 12, 2018, investors sued PG&E Corporation (“PG&E” or the “Company”) in United States District Court For The Northern District of California. Plaintiffs in the federal securities class action allege that they acquired PG&E stock at artificially inflated prices between April 29, 2015 and June 8, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. Here’s what you need to know about the PG&E class action (PCG class action):
Summary of the Allegations
Based in California, the Company (NYSE: PCG) carries out the bulk of its operations through its wholly owned subsidiary, Pacific Gas and Electric Company (“Pacific Gas Electric” or the “Utility”).
Incorporated in 1905, Pacific Gas Electric now has 20,000 employees and millions of customers in a 70,000-square-mile service area in northern and central California. According to PG&E’s website, the Utility distributes energy through 106,681 circuit miles of electric distribution lines, 18,466 circuit miles of interconnected transmission lines, 42,141 miles of natural gas distribution pipelines and 6,438 miles of transportation pipelines.
Summary of Facts
PG&E and six of its current and former senior executives (the “Individual Defendants”) are now accused of lying and withholding critical information about the Company’s business practices during the Class Period.
Specifically, they are accused of omitting truthful information about its compliance with safety requirements and state regulations, and the role of its electricity networks in numerous wildfires, from SEC filings and related materials. By knowingly or recklessly doing so, they allegedly caused PG&E stock to trade at artificially inflated prices during the time in question.
The truth emerged in a series of events that transpired between October 8, 2017 (when the wildfires started) and June 8, 2018.
Three days after the California wildfires started, the media reported that state authorities/officials were “looking at” whether the Company’s power lines sparked any of the wildfires that decimated more than 245,000 acres in eight counties. On that same day (October 11, 2017), the Company filed a form with the SEC in which it said that it was “currently unknown whether the Utility would have any liability associated with these fires.”
Then, on December 20, 2017, the Company issued a press release, which it also filed with the SEC, in which it announced the suspension of its cash dividend. It also explained that it based its decision on uncertainty “related to causes and potential liabilities associated with the extraordinary October 2017 Northern California wildfires.”
Finally, on May 25, 2018 and June 8, 2018, CAL FIRE investigators issued two separate press releases in which they said that trees parts of trees coming into contact with PG&E power lines sparked 16 of the Northern California wildfires.
A closer look…
As alleged in the June 12 complaint, PG&E repeatedly made misleading public statements throughout the Class Period.
For example, during a conference call held at the beginning of the Class Period to discuss the Company’s first fiscal quarter ended March 31, 2015, one of the Individual Defendants “assured investors of the Company’s commitment to ‘step up vegetation management activities to mitigate wildfire risk.’”
Then, on a form filed with the SEC on February 18, 2016, the Company said in pertinent part: “Throughout 2015, the Utility upgraded several critical substations and re-conducted a number of transmission lines to improve maintenance and system flexibility, reliability and safety.”
On the same form, the Company added that: “The Utility plans to continue performing work to improve the reliability and safety of its electricity and distribution operations in 2016.”
Impact of the Alleged Fraud on PG&E’s Stock Price and Market Capitalization
|Closing stock price prior to disclosures:
|Closing stock price the trading day after disclosures:
|One day stock price decrease (percentage) as a result of disclosures:
The following chart illustrates the stock price during the class period:
Actions You May Take
If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.
NOTE: The deadline to file for lead plaintiff in this class action is August 13, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.
In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in PG&E common stock using court approved loss calculation methods.
Recently Filed Cases
Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action. Please contact us if you would like an LK report for any of these cases:
|This information is provided for general information purposes only, and should not be construed as legal advice, nor does it establish an attorney-client relationship with Levi & Korsinsky LLP. Any and all information herein is simply an opinion based on publicly available information and should not necessarily be construed as fact. For more information, please visit our website at www.zlk.com.
Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse. With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.
Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients. Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.
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