Massive SCANA fraud case headed to $192 million settlement

A massive federal civil fraud lawsuit brought by shareholders against former SCANA power company officials is on its way to a settlement.

According to legal papers filed late Tuesday afternoon in federal court in Columbia, shareholders and representatives of the former SCANA have agreed on a $192.5 million settlement to end the class action case.

The settlement consists of $160 million in cash and $32.5 million in stock of Dominion Energy, the Virginia-based company that has taken over all SCANA’s operations and customer base. Both individual and institutional investors would be eligible for recovery.

Shareholder lawyers in the case were seeking to recover some $2.7 billion in alleged losses to their stock holdings as a result of the surprise failure of SCANA’s plans to build a $20 billion nuclear reactor in Fairfield County.

The proposed settlement, detailed in a 200-plus page filing, still must be approved by U.S. District Judge Margaret Seymour. She will likely schedule a hearing in the near future during which matters in the settlement will be publicly aired.

The lawsuit, first filed in 2017, has been marked with bitter allegations against SCANA and some of its former top executives.

Last March, shareholder lead lawyer John Browne of New York City told Judge Seymour in a public hearing that “The bottom line is they (SCANA executives) lied to everyone, and they did it intentionally.”

The purpose of the “lies” that were told, according to Browne, was to prop up SCANA stock during a time when power company executives allegedly knew that the nuclear project was in danger of failing — information that would have depressed SCANA’s stock price at a time when it was above $60 and looking like it was going to rise higher.

When to the surprise of many the project failed, in the summer of 2017, the stock plummeted to $43 a share.

A major turning point in the lawsuit came last April, when Judge Seymour — after years of pre-trial wrangling — ruled that the shareholders and their lawyers had enough evidence to take three former SCANA top executives to trial.

Seymour wrote that shareholders’ evidence could show that former SCANA top officials “acted at least recklessly and possibly deliberately” to cover up troubles at the nuclear plant.

Those executives were former SCANA CEO Kevin Marsh, former chief financial officer Jimmy Addison and former chief operation officer Stephen Byrne. Seymour also kept three former SCANA board members — Harold Stowe, Maybank Hagood and James Roquemore — as defendants in the case.

A month before Seymour ruled the shareholder case could go to trial, lawyers for the former SCANA officials argued that the shareholders’ lawsuit should be dismissed for lack of evidence. A SCANA attorney asserted that company officials told investors the truth and disclosed risks.

The failure of plans to build the nuclear plant destroyed SCANA, long one of South Carolina’s major publicly traded companies, as a corporate entity. SCANA was acquired last January by Virginia-based Dominion Energy and has ceased to exist.

State Sen. Marlon Kimpson, D-Charleston, a South Carolina lawyer who worked on the case with the lead New York City legal firm of Bernstein Litowitz Berger & Grossman, told The State Tuesday night, “I am proud the parties were able to reach this proposed settlement, which I believe offers a fair, reasonable and adequate recovery for SCANA’s investors.”

The settlement document says:

▪ The $192.5 million payment, if approved, “would be the largest securities class action recovery in the District of South Carolina” and “among the top 100 securities class action recoveries nationwide.”

▪ The proposed settlement came after a massive plaintiffs’ lawyer investigation, including interviews with some 69 former SCANA employees and workers at the doomed nuclear plant.

The FBI and the U.S. Attorney’s Office of South Carolina have been conducting an investigation into whether there was criminal fraud by former SCANA top officials. No results have been announced yet.

The settlement, if approved, will be paid for by Dominion Energy and insurance companies for the former SCANA.

Maayan Schechter contributed to this report.

This story was originally published January 7, 2020 at 6:40 PM.