FirstEnergy Corporation - Securities Class Action

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Stanford Law School

FirstEnergy Corporation Conclusion: On January 3, 2005, the Court entered the Orders awarding lead class plaintiffs' counsel's attorneys' fees and reimbursement of expenses and approving the plan of allocation. The Court further entered the Final Judgment and Order of Case Dismissal With Prejudice signed by U.S. District Judge James S. Gwin. The case is closed.

According to a filing with the Securities and Exchange Commission from July 2004, FirstEnergy Corporation reached an agreement to pay $89.9 million to settle this class action lawsuit. Its insurance carrier will pay $71.92 million. The company will pay the remaining $17.98 million. The company defendant said the agreement didn't amount to an admission of wrongdoing. The settlement is subject to court approval.

On December 9, 2003, the Court entered an Order consolidating the actions under the caption In re: FirstEnergy Securities Litigation, Case No. 5:03CV01684. The Court appointed lead plaintiff approved their choice of lead counsel. On January 23, 2004, an Amended Complaint was filed, and the defendants soon after filed a motion to dismiss the Plaintiffs' Consolidated Complaint. On May 3, 2004, the Court entered the Order denying the defendants' motion to dismiss as to all claims except the claim brought under Sec. 12(a)(2). The Sec. 12(a)(2) claim was dismissed without prejudice for lack of standing. Further, on June 24, 2004, Court issued an Order denying defendants' motion for reconsideration of the denial to dismiss plaintiffs' amended consolidated complaint. The plaintiffs soon after filed a Proposed Stipulation and Agreement of Settlement.

At least a dozen complaints were filed in U.S. District Court and Summit County Common Pleas Court within the last year against the company, its executives and directors by firms representing shareholders or debt holders. The various federal court securities lawsuits were consolidated, according to FirstEnergy, which said two similar lawsuits also were pending in state courts.

The original complaint alleges that the company misled shareholders and others about its profitability. The complaint alleges that FirstEnergy and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of FirstEnergy securities.

More specifically, the complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (1) that the Company had materially overstated its earnings, revenues, net income, and earnings per share; (2) that the Company was improperly accounting for its annual amortization expenses by using all transition revenues recorded on all regulatory books rather using only the portion of transition revenue that corresponded to transition costs to determine the appropriate amortization; (3) that the Company was improperly accounting for above-market leases; (4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times. On August 5, 2003, the Company reported that it would have to restate its financial results for fiscal year 2002 and the first quarter of 2003 due to its improper accounting for its annual amortization expenses and for above-market leases. News of this shocked the market. Shares of FirstEnergy fell 8.5 percent to close at $31.33 per share on extremely heaving trading volume.

INDUSTRY CLASSIFICATION:
SIC Code: 4911
Sector: Utilities
Industry: Electric Utilities

COMPANY/ISSUER NAME:	FirstEnergy Corporation
COMPANY/ISSUER TICKER:	FE
COMPANY WEBSITE:	http://www.firstenergycorp.com

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Godin, et al. v. FirstEnergy Corporation, et al.

COURT: N.D. Ohio	DOCKET NUMBER: 03-CV-01684
JUDGE NAME: Hon. Lesley Wells
DATE FILED: 08/08/2003	SOURCE: Business Wires
CLASS PERIOD START: 04/24/2002	CLASS PERIOD END: 08/05/2003
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
Abbey Gardy, LLP 212 East 39th Street, New York, NY, 10016 (voice) 212.889.3700, (fax) , info@abbeygardy.com Berger & Montague PC 1622 Locust Street, Philadelphia, PA, 19103 (voice) 800.424.6690, (fax) 215.875.4604, investorprotect@bm.net Brodsky & Smith, LLC 11 Bala Avenue, Suite 39, Bala Cynwyd, PA, 19004 (voice) 610.668.7987., (fax) 610.660.0450, esmith@Brodsky-Smith.com Cauley Geller Bowman Coates & Rudman, LLP (New York) 200 Broadhollow, Suite 406, Melville, NY, 11747 (voice) 631.367.7100, (fax) 631.367.1173, Federman & Sherwood 120 North Robinson, Suite 2720, Oklahoma City, OK, 73102 (voice) 405-235-1560, (fax) , wfederman@aol.com Landskroner - Grieco, Ltd. 1360 West 9th St., Suite 200, Cleveland, OH, 44113-1904ina (voice) 866.522.9500, (fax) , jack@landskronerlaw.com Law Offices of Charles J. Piven, P.A. World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202 (voice) 410.332.0030, (fax) , pivenlaw@erols.com Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com Seeger Weiss LLP (New York Old Address) 40 Wall Street. The Trump Building, New York, NY, 10005 (voice) 212.584.0700, (fax) , info@seegerweiss.com Spector, Roseman & Kodroff (Philadelphia) 1818 Market Street; Suite 2500, Philadelphia, PA, 19103 (voice) 215.496.0300, (fax) 215.496.6610, classaction@srk-law.com Wolf Haldenstein Adler Freeman & Herz LLP 270 Madison Avenue, New York, NY, 10016 (voice) 212.545.4600, (fax) 212.686.0114, newyork@whafh.com Zwerling, Schachter, Zwerling & Koppell LLP 767 Third Avenue , New York, NY, 10017 (voice) , (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 13

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Opinion & Orde
Type: Order		Date on the document: 12/09/2003

REFERENCE COMPLAINT

In Re: FirstEnergy Corporation Securities Litigation

COURT: N.D. Ohio	DOCKET NUMBER: 03-CV-01684
JUDGE NAME: Hon. James S. Gwin
DATE FILED: 01/23/2004	SOURCE: Business Wires
CLASS PERIOD START: 04/17/2001	CLASS PERIOD END: 08/19/2003
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego) 655 West Broadway, Suite 1900, San Diego, CA, 92101 (voice) 619.231.1058, (fax) 619.231.7423, Milberg Weiss Bershad Hynes & Lerach LLP (San Diego, CA) 600 West Broadway, 1800 One America Plaza, San Diego, CA, 92101 (voice) 800.449.4900, (fax) , support@milberg.com Weisman, Kennedy & Berris Co., L.P.A. 1600 Midland Building; 101 Prospect Avenue, W., Cleveland, OH, 44115 (voice) 216/781-1111, (fax) 216/781-6747, _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Complaint For Violations Of The Federal Securities Laws
Type: Complaint		Date on the document: 01/23/2004
Notice Of Pendency And Settlement Of Class Action
Type: Notice		Date on the document: 09/29/2004
Proof of Claim and Release
Type: Other		Date on the document: 09/29/2004
Final Judgment And Order Of Dismissal With Prejudice
Type: Order		Date on the document: 12/30/2004
U.S. District Court Civil Docket
Type: Docket		Date on the document: 09/13/2005

OTHER DOCUMENTS
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Mahon, et al. v. FirstEnergy Corporation, et al.
Type: Complaint		Date on the document: 08/12/2003
Class Action Complaint For Violations Of Federal Securities Laws
Case Name and/or Number: Mohror, et al. v. FirstEnergy Corporation, et al.
Type: Complaint		Date on the document: 08/25/2003
U.S. District Court Civil Docket
Case Name and/or Number: Mahon, et al. v. FirstEnergy Corporation, et al.
Type: Docket		Date on the document: 04/26/2004

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