According to the docket posted, on September 27, 2005, a Stipulation and Agreement of Settlement was filed. On October 18, 2005, the Court entered the Order signed by U.S. District Judge Ewing Werlein, Jr. preliminarily approving the settlement, and setting the settlement conference for January 5, 2006. On January 11, 2006, the Court entered the Order of Dismissal and Final Judgment. Further that day, the Court entered the Order approving an opt out of William H. Pineo.
In a press release dated July 29, 2005, Reliant Energy, Inc. announced that it has agreed to settle all shareholder class action lawsuits related to alleged violations of the securities laws governing the manner in which certain trading activities of the company were accounted for during the 1999 to 2001 time frame. The suits were consolidated in the U.S. District Court in Houston. The class actions include claims for damages on behalf of a class of purchasers of Reliant stock during the period of April 30, 2001 through and including May 14, 2002.
The settlement, which is subject to court approval, provides for a total settlement payment by Reliant of $68 million, of which $61.5 million is covered by Reliant's director and officer insurance policies. Reliant will make a cash payment of $6.5 million as part of the settlement and pay certain costs associated with the defense of the litigation. In addition, Deloitte & Touche LLP, another defendant in the litigation, has agreed to make a payment of $7 million, bringing the total value of the settlement to $75 million.
As reported by the Company’s FORM 10-K for the fiscal year ended December 31, 2004, the Company is a named defendant in 15 class action lawsuits filed on behalf of purchasers of the Company’s securities and the securities of CenterPoint. The lawsuits allege that the defendants violated federal securities laws by, among other things, making false and misleading statements about trading volumes and revenues. The lawsuits seek monetary damages on behalf of persons who purchased CenterPoint securities during specified class periods. In August 2002, the shareholder lawsuits were consolidated into one proceeding before the United States District Court, Southern District of Texas, Houston Division. In March 2003, the Company and the other defendants filed a motion to dismiss certain of the claims. In January 2004, the court dismissed with prejudice the federal and state securities fraud claims. With the dismissal of all fraud-related claims, the only remaining claims against the Company are claims under Section 11 and 15 of the Securities Act of 1933 pertaining to statements made in the Company’s registration statement for the Company’s IPO.
The original complaint charges Reliant Energy, Inc. and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that on May 10, 2002 and May 13, 2002, defendants disclosed that the revenue of the Reliant Companies had been artificially inflated due to power trading transactions involving simultaneous purchases and sales at the same price (referred to as round-trip" trades). Defendants further disclosed that these "round trip" trades had the effect of materially and artificially increasing reported revenues over the three-year period of 1999, 2000 and 2001.