The Complaint alleges 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 April 26, 2001 and February 14, 2002, thereby artificially inflating the price of AES securities. The complaint alleges that, throughout the Class Period, defendants issued numerous statements which highlighted the Company's strong financial performance, specifically its business operations in the United Kingdom. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the United Kingdom adopted a new framework for the pricing of energy that undermined the Company's ability to achieve profitability in its United Kingdom activities, and as a result, the Company would experience a rapid decline in its U.K. financial operations; (ii) the adoption of NETA (New Energy Arrangements) in the United Kingdom caused the Company's Fifoots utility operations to operate at a loss, as expected; defendants, however, continuously touted AES's United Kingdom operations as profitable; (iii) that in the first quarter of 2001, Fifoots had an after-tax loss of $11 million; and (iv) that the Company's United Kingdom operations were severely impaired as a result of new pricing arrangements adopted there and that the Company lacked adequate long-term contracts to avoid a rapid decline in its United Kingdom operations as a result of the new pricing arrangements. On February 14, 2002, AES shocked the market by announcing that it had ceased operations at its Fifoots Point power station in the United Kingdom because of "sliding wholesale electricity prices." The price of the Company's stock dropped precipitously in inordinate trading volume when the Company, for the first time, announced that it was experiencing problems in its Fifoots Point power plant in the United Kingdom and as a result the plant would be closed. In response to the news, AES plummeted over 25% on February 15, 2002 after the truth concerning AES's Fifoots Point plant and future prospects were finally revealed, dropping from $9.50 per share on February 14, 2002, to $7.00 per share on February 15, 2002 -- on enormous trading volumes of 29,962,400 (far greater than the Company's average trading volume of 3.3 million shares).

According to the Company’s FORM 10-K/A For The Fiscal Year Ended December 31, 2004, in October 2002, the Company and certain individuals were named as defendants in purported class actions filed in the United States District Court for the Eastern District of Virginia. Between October 29, 2002 and December 11, 2002, seven virtually identical lawsuits were filed against the same defendants in the same court. The lawsuits purport to be filed on behalf of a class of all persons who purchased the Company’s common stock and certain of its bonds between April 26, 2001 and February 14, 2002. The complaints purport to allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder based on statements or omissions concerning the Company’s United Kingdom operations and the alleged effect of the NETA on those operations. On January 16, 2003, the Court granted defendants’ motion to transfer the actions to the United States District Court for the Southern District of Indiana. On September 26, 2003, plaintiffs filed a single consolidated amended class action complaint on behalf of a purported class of all persons who purchased the Company’s common stock and certain of its bonds between July 27, 2000 and November 8, 2002 (the “Imler Action”). The consolidated amended class action complaint, in addition to asserting the same claims asserted in the original complaints, also purports to allege that AES and the individual defendants failed to disclose information concerning AES’s role in purported manipulation of the California electricity market, the effect thereof on AES’s reported revenues, and AES’s purported contingent legal liabilities as a result thereof, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Defendants filed a motion to dismiss on November 17, 2003. On October 1, 2004, the parties filed a Stipulation and Agreement of Settlement pursuant to which defendants caused to be paid a total of $5 million into a settlement fund to settle, as defined in the stipulation, all claims arising out of this action and a related action captioned Moskal v. The AES Corporation, et al., 1:03-CV-0284. Defendants settled the lawsuits without any admission or concession of any liability or wrongdoing or lack of merit in their defenses. On January 28, 2005, the Court entered an order granting final settlement.