July 22, 2020
Deloitte told a South Carolina federal court that it shouldn’t have to face a thinly substantiated shareholder suit accusing the firm of issuing audit reports that misled investors about the progress SCANA Corp. was making on a nuclear energy expansion project that failed.
Deloitte said that despite the length of the more than 200-page complaint, investors made only thin allegations the accounting firm violated the Securities and Exchange Act. The only specific Deloitte actions targeted were two auditing statements the firm made about SCANA, and those statements can’t be supplemented “with irrelevant allegations” to keep the securities fraud claim alive, Deloitte argued Monday in a motion to dismiss.
The lawsuit aims to link Deloitte to utility company SCANA Corp.’s abandonment of its $9 billion nuclear power plant expansion and its messaging to investors — allegedly despite internal knowledge of delays — that the project was on schedule to receive $1.4 billion in federal tax credits.
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The complaint seeks to represent a class of those that bought SCANA securities from February 2016 through December 20, 2017. It says Deloitte spent decades as SCANA’s auditor and was therefore required to intimately understand its business and statements. The complaint says Deloitte knew about the Bechtel findings and had other information showing the project wouldn’t be done in time to take advantage of the tax credits.
“Deloitte nonetheless misleadingly told investors in violation of [industry standards] that SCANA’s financial statements confirming that the nuclear project was on schedule were ‘presented fairly, in all material respects’ … and that SCANA’s related internal control over financial reporting was effective,'” according to the complaint.
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Laura Posner, a Cohen Milstein Sellers & Toll PLLC attorney representing the plaintiffs, said motions to dismiss securities class actions are routine even “when their arguments are weak.”
“We look forward to responding to the motion and ultimately proving Deloitte’s failure to fulfill its critical gatekeeping responsibilities,” Posner said in an email.
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The plaintiffs are represented by William Tinkler of Tinkler Law Firm LLC and Laura H. Posner, Ji Eun Kim, Steven J. Toll and Jan Messerschmidt of Cohen Milstein Sellers & Toll PLLC and Gordon Ball of Gordon Ball PLLC.
Read Deloitte Wants Investor’s Nuclear Energy Project Suit Tossed.