The Massachusetts Pension Reserves Investment Board (MA PRIM), as lead plaintiff for a class of purchasers of Massey Energy common stock, has reached a $265m all-cash settlement with Alpha Natural Resources (NYSE: ANR).
Alpha, a Virginia-based coal producer, bought Massey Energy in June 2011, well after the events targeted in the lawsuit took place. Massey had for a number of years before that been a publicly-traded company. Massey was the largest Central Appalachian coal producer at the time it was taken over by Alpha.
The deal resolves securities fraud claims made in federal court and is subject to court approval, the plaintiffs said in a Dec. 9 statement. The securities fraud claims center around Massey’s alleged misrepresentation of its safety practices, and the financial losses suffered by investors when the market learned of those misrepresentations.
As alleged, Massey and its officials misled investors by regularly affirming and touting its “safety improvement initiatives” established after a deadly fire at one of its coal mines in 2006. Then in April 2010, 29 miners died in an explosion at Massey’s Upper Big Branch deep mine in southern West Virginia in one of the deadliest U.S. coal mining accidents in 40 years.
News about the explosion and its origins, subsequent criminal investigations and indictments, and Congressional testimony revealed that despite Massey’s public statements of putting “safety first,” it had in fact disregarded industry safety standards and routinely concealed safety violations from federal safety inspectors, said the plaintiffs.
“We are very pleased to achieve this settlement on behalf of investors,” said Joel Bernstein, a partner at the law firm of Labaton Sucharow, which served as counsel for Mass PRIM and co-lead counsel for the class together with the law firm of Robbins Geller Rudman & Dowd.