In a new lawsuit alleging civil federal fraud, the Motley Rice law firm has unleashed a volley of accusations against SCANA and its three top executives, charging them with orchestrating a “deliberate misinformation campaign” about its now-failed nuclear project to pump up stock prices.
SCANA and CEO Kevin Marsh, chief finance officer Jimmy Addison and executive vice president Steve Byrne “artificially drove up the price of SCANA’s stock by issuing false and misleading statements to investors, and omitting material information concerning the progress, cost and completion schedule of the multibillion-dollar nuclear construction project at V.C. Summer Nuclear Station ...,” the lawsuit said.
The shareholder class action lawsuit also charges that even after receiving a Bechtel consulting firm confidential report on Feb. 5, 2016, that described numerous difficulties at the plant, SCANA – the parent company of SCE&G – and its top officials continued to tell the public and investors that things were fine.
“The defendants knew that the public documents and statements issued or disseminated in the name of the company were materially false and misleading ...,” said the lawsuit, which alleges violations of federal securities laws.
SCANA had no immediate comment on the lawsuit, saying it does not comment on pending litigation. Its stock has dropped over this year from the mid-$70s to in the $50 range Thursday.
On April 28, 2016, two months after receiving the Bechtel report, SCANA held a conference call with analysts and investors to discuss the company’s first-quarter operations, the lawsuit said. During that call, Byrne was asked about construction on the reactors, and he replied that SCE&G’s contractors were “doing a tremendous job” and that progress was “better than we expected,” the lawsuit said.
The lawsuit also quoted a May 1, 2016, private letter sent to Westinghouse, the nuclear plant contractor, by Santee Cooper CEO Lonnie Carter, in which Carter told the Westinghouse interim president, “Unfortunately, our experience with Westinghouse ... has been set in a trend of continuous deceit and non-transparency.”
Santee Cooper, a state-owned South Carolina utility, was partnering with SCANA on the nuclear project. Santee Cooper has a 45 percent stake in the project; SCANA, 55 percent. The two stopped construction at the site July 31.
The lawsuit also quoted a “private email” sent by Marsh in June 2016 to the parent company of Westinghouse that said in part, “We have no doubt that we have been the victim of financial malfeasance by (Westinghouse) ...,” the lawsuit said.
Then in late July 2016, Byrne told analysts and investors in a conference telephone call that the completion dates for the reactors, of 2019 and 2020, remained intact, the lawsuit said.
The suit is being brought on behalf of all people who acquired SCANA stock between Jan. 19, 2016, and Sept. 22, 2017, “and who were damaged thereby,” the lawsuit said. “Plaintiff believes that there are hundreds or thousands of members in the proposed class.”
Motley Rice attorney Sen. Marlon Kimpson, D-Charleston, who helped filed the suit, said, “It’s important for people to know there are thousands of victims as a result of the behavior of the defendants in this case, and the other cases that have been filed.”
His suit seeks redress for investors, including retirees and others who have invested in SCANA stock as an asset “and all other entities who have been misled by SCANA’s actions,” Kimpson said.
Motley Rice, a large plaintiffs’ law firm headquartered in Mount Pleasant, has offices in seven states and Washington. It is known for handling major cases, including helping negotiate the BP Deepwater Horizon damage claims and achieving a $500 million decision for asbestos victims and their families.