By Andrea Lannom
Massey Energy officials have until June 18 to file a response to a federal class action lawsuit alleging Massey’s stock was artificially inflated because officials misled the market about safety compliance.
Filed in April 2010 by the Commonwealth of Massachusetts Pension Reserves Investment Trust, the suit charges Alpha Appalachia Holdings Inc. and several Massey officials including former CEO Don Blankenship with violation of the Securities Exchange Act of 1934.
The suit alleges officials inflated stock between February 2008 and July 2010 and lied about the safety of its operations.
“In fact, safety at Massey’s mines was repeatedly sacrificed so that aggressive production goals could be met,” the suit states. “Massey had received numerous undisclosed citations arising from serious uncorrected safety and other regulatory violations at surface and underground coal mines it operates in West Virginia and neighboring states.”
Plaintiffs claim the price of Massey common stock plunged following information revealed after the April 2010 explosion at Upper Big Branch Mine. This decline caused “hundreds of millions of dollars in losses” to investors who purchased shares relying on information regarding safety, the suit states.
“The tragic, and avoidable, explosion at the Upper Big Branch mine on April 5, 2010 shockingly and suddenly revealed the concealed safety risks to investors causing the price of Massey stock to decline $9.47 over the next two days, a two-day drop that reduced the value of Massey’s common stock by more than 17 percent, resulting in an immediate loss of $900 million in market capitalization,” the suit claims.
Massey officials moved to dismiss the lawsuit, but that motion was denied in a March 28 order. Parties will attend a scheduling conference at 1:30 p.m. June 28 in Beckley.
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