The original Complaint alleges that defendants violated Sections 10(b), 14(e) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and common law fiduciary duties, by purchasing certain Corporate Units (NYSE: TXU PrC) and PRIDES (NYSE: TXU PrD) (collectively, "the Convertible Securities") without disclosing its plan to dramatically increase the dividend payout on TXU common stock upon completion of the Tender Offer. The complaint alleges that TXU in September 2004 made a self-tender offer to purchase the Convertible Securities at a price linked to the value of its common stock, without disclosing its plan to dramatically increase the common stock's dividend payout immediately following completion of the Tender Offer. Nine short days after the Tender Offer expired, TXU adopted a 350% increase in its common stock dividend, resulting in a 20% increase in the common stock price. To keep the common stock price low during the Tender Offer pricing period, however, TXU injected a false air of uncertainty into the market concerning its plan to increase the dividend, which enabled it to purchase the Convertible Securities from Plaintiffs and other Class members at a substantial and artificial discount.
On November 10, 2005, the Court issued the Order granting the motion to appoint plaintiffs Flaherty & Crumrine Preferred Income Fund Incorporated, Flaherty & Crumrine Preferred Income Opportunity Fund Incorporated, and Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated as lead plaintiffs and further appointing Shockman Law Offices and Bonnett Fairbourn Friedman & Balint, P.C., as counsel for lead plaintiffs and Dodge & Gillman, P.C., as local counsel for lead plaintiffs. On November 28, 2005, a First Amended Class Action Complaint was filed. The defendants responded by filing a motion to dismiss the First Amended Class Action Complaint on December 16, 2005. On August 30, 2006, U.S. District Judge A. Joe Fish signed the Memorandum Opinion and Order granting the Defendants’ motion to dismiss the Plaintiffs' First Amended Class Action Complaint with prejudice for failure to state a claim. Judgment was entered that day. On September 27, 2006, the plaintiffs filed a Notice of Appeal in the U.S. Court of Appeals for the Fifth Circuit. Based on the September 18, 2007, opinion from the U.S. Court of Appeals for the Fifth Circuit, the district court’s judgment was vacated and the action was remanded back the U.S. District Court for the Northern District of Texas for reconsideration. On November 26, 2007, the plaintiffs filed a Second Amended Class Action Complaint. The defendants responded by filing a motion to dismiss the Second Amended Complaint on December 14, 2007. On January 29, 2008, the defendants filed a motion to dismiss Count Four of the Second Amended Complaint.
On April 4, 2008, U.S. District Court Judge A. Joe Fish signed the Memorandum Opinion and Order granting the defendants’ motion to dismiss and the plaintiffs' second amended class action complaint was dismissed with prejudice for failure to state a claim. Judgment was further entered that day. On May 2, 2008, the plaintiffs again filed a Notice of Appeal from the final judgment. On May 5, 2009, the Court entered the certified copy of the Opinion, Judgment and Mandate from the U.S. Court of Appeals for the Fifth Circuit which affirmed the decision of the District Court.