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* Press release…
Bronstein, Gewirtz & Grossman, LLC notifies investors that a class action lawsuit has been filed against Exelon Corporation (“Exelon” or the “Company”) (NASDAQ: EXC) and certain of its officers, on behalf of shareholders who purchased or otherwise acquired Exelon securities between February 9, 2019 and November 1, 2019, both dates inclusive (the “Class Period”).
This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
The complaint alleges that throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Exelon and/or its employees were engaged in unlawful lobbying activities; (2) the foregoing increased the risk of a criminal investigation into Exelon; (3) ComEd’s revenues were in part the product of unlawful conduct and thus unsustainable; and (4) that, as a result, the Company’s public statements were materially false and misleading at all relevant times.
On July 15, 2019, during pre-market hours, Exelon filed a Current Report on Form 8-K with the SEC, disclosing that both Exelon and ComEd had “received a grand jury subpoena from the U.S. Attorney’s Office for the Northern District of Illinois requiring production of information concerning their lobbying activities in the State of Illinois.”
Then, on October 9, 2019, during pre-market hours, Exelon filed another Current Report on Form 8-K with the SEC, disclosing that, on October 4, 2019, both Exelon and ComEd “received a second grand jury subpoena from the U.S. Attorney’s Office for the Northern District of Illinois that requires production of records of any communications with certain individuals and entities, including Illinois State Senator Martin Sandoval.” That Current Report also disclosed that, as far back as “[o]n June 21, 2019, the Exelon Corporation Board formed a Special Oversight Committee, consisting solely of independent directors, to oversee [Exelon and ComEd’s] cooperation and compliance with the subpoena, any further action taken by the U.S. Attorney and any resulting actions that may be required or recommended.”
On October 15, 2019, shortly before the market closed, Exelon issued a press release announcing the abrupt departure of Anne Pramaggiore (“Pramaggiore”), Chief Executive Officer (“CEO”) of Exelon Utilities, and former President/CEO of ComEd. The Company’s statement on Pramaggiore’s retirement offered no reason for her departure, but analysts following the Company came to the conclusion that the criminal subpoenas and Pramaggiore’s abrupt resignation were related. On this news, Exelon’s stock price fell $2.15 per share, or 4.57%, to close at $44.91 per share on October 16, 2019.
Then, on October 31, 2019, during intraday trading, Exelon filed a Quarterly Report on Form 10-Q with the SEC, disclosing that “[o]n October 22, 2019, the SEC notified Exelon and ComEd that it has also opened an investigation into their lobbying activities.” On this news, Exelon’s stock price fell $1.17 per share, or 2.51%, to close at $45.49 per share on October 31, 2019.
Finally, on November 1, 2019, after the market opened, the Chicago Tribunereported that “[a] source with knowledge of the case in Chicago” confirmed that “Pramaggiore is one focus of the ongoing federal investigation.” According to the same article, “[t]he ComEd lobbying investigation dates to at least mid-May, when the FBI executed search warrants at the homes of former lobbyist Mike McClain of Quincy, a longtime confidant of House Speaker Michael Madigan, and of former 23rd Ward Ald. Michael Zalewski” (emphasis added). Additionally, “[t]he information sought by the FBI included records of communications among Madigan, McClain and Zalewski about attempts to obtain ComEd lobbying work for Zalewski.” On this news, Exelon’s stock price fell an additional $0.15 per share to close at $45.34 per share on November 1, 2019—a total decline of 2.83% since the initial announcement of the SEC investigation.
The lawsuit is here.
* One aspect of the lawsuit is Exelon’s “Code of Conduct” for its lobbying operation…
No Exelon personnel may engage in lobbying activities on behalf of the Company, testify or provide comments before any legislative committees for Exelon, or accept an appointment to an advisory or study group established by a legislative body or administrative agency on behalf of Exelon without first obtaining the approval of Government and Regulatory Affairs or the Legal Department. Government and Regulatory Affairs will also help ensure compliance with all lobbying registration, reporting, and disclosure requirements. All Exelon lobbyists are expected to follow both the letter and spirit of the lobbying laws and to maintain the highest standards of professional integrity.
Which leads to this claim…
Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Exelon and/or its employees were engaged in unlawful lobbying activities; (ii) the foregoing increased the risk of a criminal investigation into Exelon; (iii) ComEd’s revenues were in part the product of unlawful conduct and thus unsustainable; and (iv) that, as a result, the Company’s public statements were materially false and misleading at all relevant times.
posted by Rich Miller
Tuesday, Dec 17, 19 @ 3:18 pm
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I get the reason, rationale, even the monetary aspects.
If, (and when?) there are indictments, this suit will have even greater weight to it, and if it goes all the way up, this lawsuit will be as big as any when figuring corruption with the criminal dove tail included.
Comment by Oswego Willy Tuesday, Dec 17, 19 @ 3:23 pm
Pretty standard hopeful language for lawsuits of this nature. They’re obviously hoping things play out their way and the Feds make their case for them, so they can extract a settlement without much effort on their part.
Comment by Ron Burgundy Tuesday, Dec 17, 19 @ 3:27 pm
The pressure builds on the cast of characters already under pressure from the feds.
Comment by Donnie Elgin Tuesday, Dec 17, 19 @ 3:48 pm
This should be fun. And I hope it really hurts all those playing games cutting corners and inside dealing. Only wish wrong doers were personally responsible. Go get them SEC.
Comment by DuPage Saint Tuesday, Dec 17, 19 @ 3:50 pm
===ComEd’s revenues were in part the product of unlawful conduct and thus unsustainable===
This will be interesting to see what is uncovered. In order to prove damages, I believe they’ll need to show how much of ComEd’s revenue was due to the lobbying effort.
Comment by Robert the Bruce Tuesday, Dec 17, 19 @ 3:57 pm
Our State AG should join in or file another similar lawsuit on behalf of the state pension funds that own shares in the corporation.
The Directors of this corporation need to go. The state pension trustees need to address these issues.
Shareholders need to be on top of this and should not need the US Attorney’s office to manage the affairs of this company.
Comment by Back to the Future Tuesday, Dec 17, 19 @ 3:58 pm
What illegal lobbying activities did they commit? My bet is that their lobbying registrations and reports are good if not flawless.
Now, they may have engaged in other questionable activities used to further or achieve their companies’ (lobbying) agenda and pad the bottom line.
I think this complaint is mixing apples and oranges a bit because the general public believes lobbying is a tawdry profession.
Comment by Primo Tuesday, Dec 17, 19 @ 4:01 pm
Edison blocked the Rock Island Clean Line from being built. They did not want competition of the cheaper wind power being available against their more expensive nukes. Iowa, Nebraska, South Dakota, and other states have way more wind energy then what they can use locally. The existing grid is near capacity and not available to transport most of this wind energy. With no market, it doesn’t pay to build a wind farm. Thus if they stop the needed power lines, they can completely stop the competition. That would be worth a lot of money to someone or some power company.
Comment by DuPage Tuesday, Dec 17, 19 @ 4:01 pm
As soon as we learned that the special committee of the board was set up in June but not disclosed until October, I’ve expected this suit. It seemed clear to me that it was a securities law 10b5 violation. But since the stock didn’t move that much, I thought it might not happen. Hard to have a class action with no damages because then there’s nothing in it for the lawyers. But it is a legit cause of action and that means discovery…pretty much the last thing ComEd Exelon wants to have happen.
Comment by Chicago Cynic Tuesday, Dec 17, 19 @ 4:12 pm
A law firm in LA ( the Schall Law Firm)
also announced the filing of a class action law suit.
Comment by Back to the Future Tuesday, Dec 17, 19 @ 4:30 pm
Really? A law suit? So predictable.
Comment by Shytown Tuesday, Dec 17, 19 @ 4:30 pm
Lobbyists ask for things. Lawmakers give things.
If lawmakers start asking lobbyists for things (i.e. patronage jobs), that’s the corruption. If a lobbyist (or a corporation with lobbyists) starts to give things that were never requested, and those things are not given directly to the public official, then where is the illegal act?
Comment by Da Lobsta Tuesday, Dec 17, 19 @ 5:21 pm
For anyone wondering, there are going to be dozens of these lawsuits.
Not because of any specific merits, but because shareholder lawsuits like this are incredibly common.
Comment by TheInvisibleMan Tuesday, Dec 17, 19 @ 8:15 pm
= On this news, Exelon’s stock price fell an additional $0.15 per share to close at $45.34 per share on November 1, 2019—a total decline of 2.83% since the initial announcement of the SEC investigation.=
If you go back and look at the historical average, Nov 1st closing price is in the average range. The 2019 year open price was 44.0700. One can guess that the investigation caused the price to fall, but maybe we should ask why the stock was low in 2016 & 2017 after the key legislation passed?
https://www.macrotrends.net/stocks/charts/EXC/exelon/stock-price-history
Comment by {Sigh} Tuesday, Dec 17, 19 @ 9:25 pm