Milberg Weiss Announces The Filing of a Class Action Suit on Behalf of Purchasers of the Securities of Allegheny Energy, Inc

Business Wire, Nov 15, 2002

Business Editors & Legal Writers

NEW YORK--(BUSINESS WIRE)--Nov. 14, 2002

The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a class action lawsuit was filed on November 14, 2002, on behalf of purchasers of the securities of Allegheny Energy, Inc., ("Allegheny Energy" or the "Company") (NYSE: AYE) between April 23, 2001 to November 4, 2002 inclusive (the "Class Period'). A copy of the complaint filed in this action is available from the Court, or can be viewed on Milberg Weiss' website at: http://www.milberg.com/cases/allegheny

The action is pending in the United States District Court for the Southern District of New York, located at 500 Pearl Street, New York, NY 10007 against defendants Allegheny Energy, Alan J. Noia (CEO, President and Chairman) Bruce Walenczyk (CFO and Executive VP) and T.J. Kloc (Chief Accounting Officer).

The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between April 23, 2001 to November 4, 2002. For example, throughout the Class Period, Allegheny Energy issued numerous quarterly press releases reporting supposedly "record" results of operations and representing that it expects to earn $2.50 to $2.70 per share in 2002 despite the downturn in the economy and energy markets in particular. In addition, the Company filed detailed financial reports with the Securities and Exchange Commission ("SEC") throughout the Class Period. According to the complaint, these representations were materially false and misleading because Allegheny Energy was improperly recognizing revenue from "round trip" energy transactions with Enron Corp. According to the complaint, such transactions, which were undertaken by a subsidiary of the Company purchased from Merrill Lynch Capital Services, are "wash" transactions involving the simultaneous purchase and sales of energy at the same quantity and price between the same parties and serve only to artificially inflate revenues for the parties involved. In addition, according to the complaint, certain of the Company's financial reports contained errors and did not accurately reflect the Company's performance and financial position. On September 25, 2002, Allegheny Energy issued a press release announcing that it had filed a complaint against Merrill Lynch alleging that Merrill Lynch concealed that the subsidiary purchased by the Company had artificially inflated its revenues through sham transactions. In response to the revelation that the Company's reported revenues were artificially inflated, Moody's Investor Services lowered Allegheny Energy's unsecured credit rating two notches to "Ba1", a "junk" rating. In response, the Company issued a press release stating that the credit downgrade did not trigger any defaults or repayment obligations and that the Company expects its liquidity to remain unaffected. On October 8, 2002, Allegheny Energy issued a press release announcing that it had defaulted on its principal credit agreements after lenders demanded additional collateral in response to the downgrade. In response, the price of Allegheny Energy's common stock plummeted by 49%, falling from an October 7, 2002 close of $7.52 per share to close at $3.80 per share on October 8. Then, on November 4, 2002, the Company issued a press release announcing that it would delay the release of its third quarter of 2002 financials because it had uncovered "miscalculations" in its second quarter financial report filed with the SEC and prior periods. That day, the price of Allegheny Energy common stock closed at $5.78 per share -- 89% below the Class Period high of $54.79 per share, reached on May 23, 2001.

If you bought the securities of Allegheny Energy between April 23, 2001 to November 4, 2002 you may, no later than December 20, 2002 , request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Milberg Weiss Bershad Hynes & Lerach LLP, or other counsel of your choice, to serve as your counsel in this action.

Milberg Weiss Bershad Hynes & Lerach LLP (http://www.milberg.com) is a 190-lawyer firm with offices in New York City, San Diego, San Francisco, Los Angeles, Boca Raton, Philadelphia and Seattle, and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others, and has been responsible for more than $20 billion in aggregate recoveries. Please contact the Milberg Weiss website for more information about the firm. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following attorneys: