The original complaint alleges that during the Class Period, defendants concealed problems with several independent power plant construction ventures for which TECO would ultimately be fully responsible, including the Company's full exposure to the demise of Enron Corporation and the vulnerability of the Company's large cash dividend, causing TECO shares to trade at artificially inflated levels, permitting defendants to sell over $4.2 million of their own personally held stock and to raise over $792 million selling equity securities in the capital markets. Then, through a series of events in late 2002 and early 2003, the Company's complex financing scheme began to unravel as several of these large projects and their liabilities were "put" to TECO, moving hundreds of millions of dollars of off-balance sheet debt onto TECO's balance sheet, resulting in the Company taking over a billion dollars in impairment charges and causing the price of its common stock to plummet from a Class Period high of over $28 per share on April 23, 2002 to below $13 per share on February 4, 2003, erasing hundreds of millions of dollars in market capitalization.
NOTE: TECO is a holding company for regulated utilities and other unregulated businesses.
As summarized by the Company’s Form 10-K for the fiscal year ended December 31, 2006, after the consolidated Class Action Complaint brought by the “TECO Lead Plaintiff Group” in connection with TECO Energy’s Merchant power activities was dismissed without prejudice by the Court on Mar. 31, 2006, plaintiffs filed their further amended complaint to which TECO Energy and the individual defendants filed their motion to dismiss on Jul. 7, 2006 based on the same ground as raised in the prior motion, failure to plead loss causation. Defendants filed a renewed motion to dismiss, and on Oct. 10, 2006, the Court granted defendants' motion to dismiss in part, leaving only one remaining issue dealing with public statements relating to the status of the contracting plan for the approximately 6,000 MWs of merchant power then under construction in several states outside of Florida. On Oct. 30, 2006, the plaintiffs filed a Rule 54(b) motion asking the Court to enter a final judgment on the matters that were dismissed by its Oct. 10th order in order to appeal that portion of the order immediately, while maintaining the balance of the action in the district Court. The Court denied the Rule 54(b) motion. A mediation on the entire suit occurred on Feb. 16, 2007 whereby the company reached an agreement in principle to settle the shareholder securities class action lawsuit.
On July 12, 2007, District Court Judge James D. Whittemore granted the Lead Plaintiffs' Motion for Preliminary Approval of Class Action Settlement. The proposed settlement was in the amount of $17,350,000.00, in cash. On October 19, 2007, the settlement fairness hearing was held and the Court granted the Plaintiffs' Motion for Final Approval of Class Action Settlement, Approval of Plan of Allocation, and Award of Attorneys' Fees and Expenses. The Court further entered the Final Judgment and Dismissal with Prejudice.