The lawsuit, brought by Pittsburgh Law Firm of Alfred G. Yates Jr, P.C. on behalf of Consol Energy shareholders, covers the period January 2002 to July 2002.
Consol is accused of exposing shareholders to risky investments by reserving 20% of its coal production to sell on the spot market. This despite company assurances to investors less than half of that would be used.
According to the lawsuit, Consol chief financial officer Bill Lyons said in January 2002 that Consol had already sold about 60 million tons of coal - about 80% of expected production for the year - and expected to sell another 8.5 million tons in the European market.
“By increasing its exposure to the spot market, the Company was subjecting itself to increased risk and uncertainty as the price and demand for coal could be volatile,” lawyers said in a statement.
Attorneys allege that even when Consol was experiencing difficulty selling the production it had allocated to the spot market production levels where maintained, causing coal inventory to increase. This in turn impacted on expenses which rose dramatically, weakening the Company's financial condition.
Consol only revised its second quarter outlook on July 18 2002, after which the price of Consol shares plummeted 30%.
The suit said investors who acquired Consol stock between January 24, the day of the first analyst conference, and July 18, the day the second-quarter outlook was revised, could be included in the class-action.
