SALT LAKE CITY — Energy Solutions Inc. and a number of its investors have reached a $26 million settlement in federal court.
The settlement agreement, filed Monday in U.S. District Court for the Southern District of New York, is still awaiting approval from a judge. The original complaint against the Utah-based company was filed in 2009 and alleged violation of federal securities laws.
Investors, including the City of Roseville Retirement System, Building Trades United Pension Trust Fund and New England Carpenters Guaranteed Annuity and Pension Funds, sued EnergySolutions, as well as various investment firms, claiming that company officials lied about future business prospects and that the financial firms helped the company draft and disseminate their prospectuses.
The shareholders claim that EnergySolutions "issued materially false and misleading statements" about business prospects around its July 2008 initial public offering, including revenue and earnings potential and the company's ability to "obtain a favorable ruling" from the Nuclear Regulatory Commission on a pending petition.
The plaintiffs allege that two months after the public offering, EnergySolutions revealed that the petition had been denied and its projected earnings and revenue numbers "would need to be significantly reduced," prompting the value of the company's stock to fall 44 percent.
"The decline in the price of EnergySolutions' common stock after the disclosures came to light was a direct result of the nature and extent of (the company's) fraud finally being revealed to investors and the market," the federal complaint states.
The investors were asking for damages, that the public offering be rescinded and that EnergySolutions pay for litigation costs. According to the settlement agreement, both parties took part in mediation sessions and eventually agreed on the settlement, despite the fact that "(EnergySolutions and the other defendants) have denied and continue to deny that they have violated the federal securities laws or any laws.
"Nonetheless, taking into account the uncertainty, risks and costs inherent in any litigation, especially in complex cases such as this (complaint), defendants have concluded that further conduct of the action could be protracted and distracting," the settlement agreement states. "Defendants have, therefore, determined that it is desirable and beneficial to them that the action be settled in the manner and upon the terms and conditions set forth in this stipulation."
The investors filed a memorandum in support of the settlement agreement Tuesday. It is not immediately clear when or if the assigned judge will approve the agreement.
Mark Walker, director of media relations for EnergySolutions, could not be reached for comment Wednesday.