By the Order and Final Judgment entered on October 7, 2005, the settlement is approved and the complaint is dismissed with prejudice. Further, the Plan of Allocation is approved and Plaintiffs’ Counsel is awarded 33 1/3% of the Gross Settlement Fund in fees, and $1,093,847 in reimbursement of expenses
According to a press release dated September 23, 2005, Duquesne Light Holdings Inc. (f/k/a DQE, Inc.) has reached a $12 million settlement in a securities fraud, class action lawsuit over whether the company and its former chairman, CEO and president made false or misleading statements about its financial condition and prospects. The agreement covers those who bought common stock between Dec. 6, 2000, and April 30, 2001. About 11.22 million DQE shares traded during that time, and stockholders who submit claims should recover about $1.07 per share. Final approval of the settlement could come at an Oct. 7 hearing in U.S. District Court in Pittsburgh.
As summarized by the Notice of Proposed Settlement of Class Action, dated August 11, 2005, on or about October 4, 2001, the first of five substantially similar putative class action complaints was filed against Defendants. On February 8, 2002, the Court issued an Order consolidating the five cases and appointing movants John C. Hynes, Anton Klaver and Town of Danversthorpe Corpus Fund as Lead Plaintiffs for the putative class. On April 15, 2002, Plaintiffs filed a Second Consolidated Amended Complaint (the “Complaint”). On or about May 24, 2002, Defendants moved to dismiss the Complaint. On August 29, 2002, after extensive briefing by both sides, Magistrate Judge Robert C. Mitchell issued a Report and Recommendation recommending that the Court deny the motion. Thereafter, on October 18, 2002, the Court issued an Order adopting the Report and Recommendation and denying the motion. On December 23, 2002, Defendants answered the Complaint. On December 12, 2002, Plaintiffs moved to certify the proposed class and sub-class and to appoint class representatives. After discovery, extensive briefing and a hearing, Magistrate Judge Mitchell issued a Report and Recommendation on April 14, 2003 recommending that the Court grant Plaintiffs’ motion to certify the proposed class and sub-class. Thereafter, on May 20, 2003, the Court issued an Order adopting Magistrate Judge Mitchell’s Report and Recommendation and granting Plaintiffs’ motion to certify the proposed class and sub-class. On February 18, 2005, after the completion of fact and expert discovery, Defendants moved for summary judgment on all of Plaintiffs’ claims. Prior to the time Plaintiffs were required to respond to that motion, the parties agreed to the settlement.
The original class action complaint filed alleged that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between December 6, 2000 and April 30, 2001, thereby artificially inflating the price of DQE securities. The complaint alleges that, throughout the Class Period, DQE issued positive statements concerning the significant and positive impact that DQE Enterprises, Inc. (“DQE Enterprises”), the Company's investment subsidiary, was having, and would continue to have, on DQE's financial results. During this time, the market for initial public offerings had dramatically slowed down. Accordingly, the ability of the companies in DQE Enterprises' investment portfolio to go public was substantially impaired. Defendants, however, issued a stream of positive statements concerning the Company's operations and prospects, but failed to disclose the impaired nature of DQE Enterprises' investments and that the Company would not realize the investment gains that defendants had caused the market to expect. As a result, defendants' estimates, projections and opinions as to the Company's operations, products, earnings and income were knowingly lacking in a reasonable basis at all relevant times. This information finally became publicly known on April 30, 2001, when DQE reported its earnings for the first quarter of 2001 and revised its earnings outlook for the full year, based in part, on the weakened outlook for DQE Enterprises. In response to this negative announcement, when trading resumed on May 1, 2001, the price of DQE common stock dropped from $30.43 per share to $23.75 per share on extremely heavy trading volume.