Summary of Case:
Scott + Scott filed a class action against Constellation Energy Group, Inc. (Ticker: CEG; CSLEP) and certain officers and directors of the Company ("Constellation" or the "Company") on behalf of all common stock purchasers from January 30, 2008 through September 16, 2008 (Class Period).
The complaint alleges that during the Class Period, Constellation Energy issued materially false and misleading statements regarding the Company's operations and financial performance. Among other things, Defendants failed to disclose that the Company's financial results were inflated by questionable accounting practices. In addition, the Company concealed the extent of its credit exposure to failing trading partners, particularly Lehman Brothers Holding Inc., which would affect the Company's ability to engage in energy-related trades. As a result of defendants' false statements and omissions during the Class Period, Constellation Energy common shares traded at artificially inflated prices.
In August 2008, share prices of Constellation Energy softened as analysts began to question certain aspects of the Company's accounting, particularly the Company's questionable characterizations of depreciation, cash flow and mark-to-market adjustments. Shortly thereafter, on September 15, 2008, Lehman Brothers, a key trading partner of Constellation Energy, filed for Chapter 11 bankruptcy protection. On that day, investors were stunned as Constellation's business exposure to the Lehman bankruptcy was revealed. By the close of the Class Period, the Company's shares traded at $24.77 per share, a 75% loss from the Class Period high.
