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Shareholders sue Allegheny Energy

November 01, 2002|by JULIE E. GREENE

julieg@herald-mail.com

A New York firm filed a lawsuit against Allegheny Energy Inc. on behalf of the utility's shareholders, alleging Allegheny did not disclose that revenues were due to "deceptive" and "illusory" trades.

Allegheny Energy spokeswoman Debbie Beck said, "We don't comment on pending litigation."

The class action lawsuit was filed by Wolf Haldenstein Adler Freeman & Herz LLP on Oct. 21 in the United States District Court for the Southern District of New York.

The suit also names as defendants Allegheny Energy Chairman, President and Chief Executive Officer Alan J. Noia, Allegheny Energy Supply Company President Michael Morrell, Allegheny Energy Senior Vice President and Chief Financial Officer Bruce Walenczyk and Daniel Gordon, the former president of Allegheny Energy Global Markets.

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The lawsuit alleges Allegheny misled investors about the utility's financial health. It cites "deceptive energy trading practices," "sham trades" and a chain of events that led to the company's stock decreasing from $12.85 per share on Sept. 25 - the day Allegheny filed a lawsuit against Merrill Lynch - to $3.80 per share on Oct. 8.

In other Allegheny Energy news, the company filed an application Thursday with the U.S. Securities and Exchange Commission to withdraw a request for permission to trade energy internationally.

Allegheny officials announced this summer they would scale back their energy trading business.

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