CMS Energy Corporation ("CMS" or the Company) provides utility operations, primarily in Michigan.

The original Complaint charges 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 materially false and misleading statements to the market between August 3, 2000 and May 10, 2002. According to the Complaint, CMS had, throughout the Class Period, improperly recognized approximately $4.4 billion in revenues by engaging in transactions lacking any economic substance using what are known as "round-trip" trading transactions. The improperly recognized revenues were, according to the Complaint, reported in the Company's quarterly and annual press releases and in financial filings with the Securities and Exchange Commission ("SEC"), throughout the Class Period. On May 10, 2002, CMS announced that the SEC was investigating the propriety of its "round-trip" trading practices. In response to the announcement, CMS' common stock price collapsed, falling from a high of $20.06 on May 10, 2002 to a low of $15.72 on May 13, 2002--a drop of more than 21% on extremely heavy trading volume.

According to the Company’s FORM 10-Q for the quarterly period ended September 30, 2007, beginning in May 2002, a number of Complaints were filed against CMS, Consumers and certain officers and directors of CMS Energy and its affiliates in the United States District Court for the Eastern District of Michigan. The cases were consolidated into a single lawsuit (the “Shareholder Action”), which generally seeks unspecified damages based on allegations that the Defendants violated United States securities laws and regulations by making allegedly false and misleading statements about CMS's business and financial condition, particularly with respect to revenues and expenses recorded in connection with round-trip trading by CMS MST. In January 2005, the court granted a motion to dismiss Consumers and three of the individual Defendants, but denied the motions to dismiss CMS and the 13 remaining individual Defendants. In March 2006, the court conditionally certified a class consisting of “all persons who purchased CMS Common Stock during the period of October 25, 2000 through and including May 17, 2002 and who were damaged thereby.” The court excluded purchasers of CMS Energy’s 8.75 percent Adjustable Convertible Trust Securities (“ACTS”) from the class and, in response, a new class action lawsuit was filed on behalf of ACTS purchasers (the “ACTS Action”) against the same Defendants named in the Shareholder Action.

The settlement described in the following paragraph has resolved both the Shareholder and ACTS Actions. On January 3, 2007, CMS and other parties entered into a Memorandum of Understanding (the “MOU”), subject to court approval, regarding settlement of the two class action lawsuits. The settlement was approved by a special committee of independent directors and by the full board of directors of CMS. Both judged that it was in the best interests of shareholders to eliminate this business uncertainty. Under the terms of the MOU, the litigation was settled for a total of $200 million, including the cost of administering the settlement and any attorney fees the court awards. CMS made a payment of approximately $123 million plus interest on the settlement amount on September 20, 2007. CMS's insurers paid $77 million, the balance of the settlement amount. In entering into the MOU, CMS made no admission of liability under the Shareholder Action and the ACTS Action. The parties executed a Stipulation and Agreement of Settlement dated May 22, 2007 incorporating the terms of the MOU. In accordance with the Stipulation, CMS paid approximately $1 million of the settlement amount to fund administrative expenses.

As summarized by the same SEC filing, on September 6, 2007, the court issued a final order approving the settlement. The remaining settlement amount was paid following the September 6, 2007 hearing. On October 5, 2007, two former officers of Consumers filed an appeal of the order approving the settlement of the shareholder litigation. Based on the objections they filed in the District Court and comments made on the record at the fairness hearing on September 6, 2007, they are not challenging the amount of the settlement. Their principal complaint was with the exclusion of all present and former officers and their immediate families from participation in the settlement. It is not anticipated that the appeal will result in changes to any material terms of the settlement approved by the District Court.

On December 18, 2007, the Court entered the Order from the U.S. Court of Appeals for the Sixth Circuit granting the motion to dismiss the appeal.