Name: U.S. Securities and Exchange Commission launches investigation into FirstEnergy Corp.
Brand: cleveland.com
SKU: cleveland-com-167
Availability: OnlineOnly

critic

U.S. Securities and Exchange Commission launches investigation into FirstEnergy Corp.

preview

NEW!582sharesCLEVELAND, Ohio – The U.S. Securities and Exchange Commission has launched an investigation into FirstEnergy Corp. in a separate probe of the company tied to the $60 million bribery scandal involving House Bill 6, records show.The examination became public in a lawsuit the company and a consulting firm filed in U.S. District Court in Cleveland against a former employee of the firm who accessed financial information about the Akron-based utility.The investigation appears to have begun soon after a federal grand jury indicted former Ohio House Speaker Larry Householder and four allies on racketeering charges involving the passage of a $1.3 billion bailout bill for two nuclear power plants, according to court filings.An FBI affidavit said FirstEnergy and its affiliates funneled $60 million to a nonprofit that Householder controlled to facilitate the bill’s passage last year. The plants were owned at the time by a subsidiary of FirstEnergy.The SEC’s public finance abuse unit is handling the regulatory investigation. The unit focuses on allegations of corruption involving publicly traded companies, municipal securities and public pension plans. The scope of the examination is unclear.Lawyers involved in the case have declined to discuss it.The SEC’s work is confidential in order to safeguard evidence, shield whistleblowers and protect companies in the event no wrongdoing is found. If it is discovered, the commission can file civil or administrative actions that seek sanctions.In this case, the notice of the investigation into FirstEnergy became public when attorneys for the company and Clearsulting, a Cleveland business that does consulting work for FirstEnergy, sued a Chardon man in federal court Sept. 1.The companies' lawsuit said Michael Pircio began working at Clearsulting as a senior analyst in March. He was responsible for preparing documents on information technology design assessments and other issues involving the utility, according to the lawsuit.The suit alleged Pircio worked on Clearsulting’s audit “of certain FirstEnergy processes and procedures for Sarbanes-Oxley compliance.” Sarbanes-Oxley refers to a federal law designed to fight fraud and increase oversight to protect a company’s shareholders and the public.On July 30, the day Householder and others were indicted, Clearsulting fired Pircio for reasons that were not specified in the lawsuit. After he was terminated, the lawsuit said, Pircio downloaded 57 files that contained sensitive financial information regarding FirstEnergy. The files were unrelated to his work, the suit said, and he was not authorized to obtain them.The information included employee salaries, payment processes and records of contractors and vendors, according to court records. It also included reviews and approvals of manual wires and tax payments, the documents said.In records filed in the case, lawyers included two letters written by H. Vincent McKnight, an attorney from Washington, D.C., who specializes in whistleblower cases.In the letters, McKnight said he represents Pircio, who shared the documents and information with him.“As reflected in the terms of the employment agreement signed by Mr. Pircio, he is not prohibited from sharing confidential information with an attorney or government official for purposes of reporting or investigating a suspected violation of law,” McKnight wrote in an Aug. 21 letter to Clearsulting.The day after the lawsuit was filed, McKnight wrote a letter to a FirstEnergy attorney.“On Aug. 7, 2020, we submitted information to the Securities and Exchange Commission concerning FirstEnergy and Clearsulting,” McKnight wrote. “Since then, we have been in communication with Brian D. Fagel, assistant director of the public finance abuse unit, and we intend to continue cooperating with the SEC in its investigation.”Fagel, reached Monday, declined to comment.Last week, Pircio’s attorneys and the companies' lawyers agreed to have Pircio “relinquish and return to FirstEnergy, upon the conclusion of the SEC investigation, all versions” of data or information that he provided to his attorneys, according to court records.It is unclear how long the investigation will take to complete.Jennifer Young, a spokeswoman for FirstEnergy, said the company would not comment on pending litigation. McKnight also declined to discuss the case, as did Pircio’s attorneys, Laura Hauser and Marc Dann. An attorney for Clearsulting also would not comment.FirstEnergy and its affiliates have not been charged in the investigation of House Bill 6. Young said the company is cooperating with authorities.FirstEnergy began pushing House Bill 6 when one of its subsidiaries, FirstEnergy Solutions, owned the Davis-Besse and Perry plants. FirstEnergy Solutions filed for bankruptcy in 2018, and the plants are now owned by a business called Energy Harbor. Gov. Mike DeWine signed the bill into law last summer.The FBI affidavit said the millions of dollars that FirstEnergy and its affiliates funneled to Householder and his allies went to pass the bill, aid legislators who supported Householder for speaker and fight a ballot initiative seeking to overturn the bailout. Authorities called it the largest pay-to-play scheme in Ohio.Already, a handful of shareholders have filed suit in state and federal courts regarding the allegations involving Householder.On July 20, the day before the FBI arrested Householder and others, the price of stock at FirstEnergy was at $41.26 a share. It closed at $29.66 on Monday.Householder and political aide Jeff Longstreth, as well as lobbyists Neil Clark, Matt Borges and Juan Cespedes, have pleaded not guilty to the racketeering charges in U.S. District Court in Cincinnati.Note to readers: if you purchase something through one of our affiliate links we may earn a commission.

NEW!582sharesCLEVELAND, Ohio – The U.S. Securities and Exchange Commission has launched an investigation into FirstEnergy Corp. in a separate probe of the company tied to the $60 million bribery scandal involving House Bill 6, records show.The examination became public in a lawsuit the company and a consulting firm filed in U.S. District Court in Cleveland against a former employee of the firm who accessed financial information about the Akron-based utility.The investigation appears to have begun soon after a federal grand jury indicted former Ohio House Speaker Larry Householder and four...

U.S. Securities and Exchange Commission launches investigation into FirstEnergy Corp.

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS