Energy Company Settles Company Stock Lawsuits

March 2, 2006 ( - CMS Energy Corp. has settled for $28 million two class-action lawsuits filed by employees whose stock in the company's 401(k) plan lost value during the controversy over energy trades in 2000 and 2001.

According to a Crains Detroit news report, in a filing with the Securities and Exchange Commission (SEC), CMS said its insurer will pay the employees and their beneficiaries for alleged losses and will also pay any legal fees and expenses awarded to the plaintiffs’ attorneys.

As part of the settlement, CMS said it would provide more extensive information on its 401(k) plan to participants and beneficiaries, according to the news report.   In addition, the company said it also would emphasize the importance of diversification and encourage participants to regularly evaluate whether their retirement-plan assets are sufficiently diversified to protect against large losses.

The lawsuits stemmed from “round-trip” energy trades that netted no profit or loss but raised a CMS subsidiary’s profile. CMS has since exited the wholesale energy-trading business, closed the subsidiary’s Texas office and phased out most of its remaining operations, Crains reports.

The settlement is subject to independent fiduciary review and review by the US District Court in Detroit. Neither CMS nor officers named admit liability.