Summary
Southern Company (SO) has disclosed a lawsuit filed on June 30, 2004, in the United States District Court for the Northern District of Georgia. The complaint, brought by an employee on behalf of a class of participants and beneficiaries of The Southern Company Employee Savings Plan, alleges violations of the Employee Retirement Income Security Act of 1974 (ERISA). The core of the lawsuit centers on investments made in Mirant Corporation common stock within the Plan. The plaintiff claims that fiduciaries breached their duties by failing to adequately investigate Mirant stock as an appropriate investment and by not informing participants about its alleged unsuitability due to Mirant's business issues. Southern Company has denied any wrongdoing and intends to defend itself vigorously. The company acknowledges that the final outcome of this litigation is currently undetermined.
Key Highlights
- 1Southern Company disclosed an ERISA lawsuit filed on June 30, 2004, concerning investments in Mirant Corporation stock within its Employee Savings Plan.
- 2The lawsuit alleges breach of fiduciary duties by defendants, including Southern Company and its subsidiaries, for failing to investigate and inform participants about the appropriateness of Mirant stock as a retirement investment.
- 3The plaintiff seeks to represent a class of Plan participants/beneficiaries whose accounts included Mirant stock since April 2, 2001.
- 4Mirant stock was distributed to Southern Company shareholders, including Plan participants, on April 2, 2001, as a dividend during Mirant's spin-off.
- 5Plan participants had a five-year window from the spin-off date to transfer funds out of the Mirant Stock Fund.
- 6Southern Company has denied all allegations and stated its intention to vigorously defend against the lawsuit.
- 7The ultimate financial impact and resolution of this legal matter are currently unknown.