A federal judge on Friday dismissed a securities-fraud lawsuit that alleged Florida Power & Light and its parent company made misleading statements about involvement in funding “ghost” candidates to influence elections.
U.S. District Judge Aileen Cannon issued a 16-page decision that rejected arguments by investors in the potential class-action lawsuit. In part, the plaintiffs contended that the stock price of NextEra Energy, FPL’s parent, plummeted in January 2023 after making disclosures that followed denials of wrongdoing.
Cannon wrote that she found plaintiffs “have failed to identify a corrective disclosure that reveals a truth that was previously concealed or obscured by defendants’ alleged fraud.”
The lawsuit was filed in June 2023 after a series of events stemming from media reports about allegations that FPL had funneled money through a political-consulting firm, Matrix LLC, and other organizations to improperly influence elections.
Probably the most high-profile example involved allegations that FPL helped back a “ghost” candidate — someone on the ballot but not an active candidate — who siphoned votes from then-state Sen. Jose Javier Rodriguez, D-Miami, in the 2020 election. Rodriguez ultimately lost by 32 votes to now-Sen. Ileana Garcia, R-Miami, with the third candidate, Alex Rodriguez, receiving 6,382 votes.
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Company officials denied wrongdoing after the media reports began. But in a November 2022 filing with the U.S. Securities & Exchange Commission — known as a 10-Q filing — NextEra acknowledged that allegations against FPL executives exposed the company to legal and “reputational” risks, according to Cannon’s ruling.
“Despite this warning to investors, the stock price of NEE (NextEra Energy) did not plummet and instead continued to steadily rise,” Cannon wrote.
In January 2023, NextEra made additional Securities & Exchange Commission filings — known as Form 8-K filings — that again acknowledged risks to the company and that FPL Chief Executive Officer Eric Silagy would retire. Silagy was a central figure in the allegations.
Attorneys for the plaintiffs, in a document filed this year opposing a motion to dismiss the case, wrote that the NextEra stock price dropped 8.7% after the January 2023 filings. They also pointed to a what is known as “clawback” provision in Silagy’s severance package.
“Defendants categorically denied that FPL had any connection to the scandal,” the document opposing dismissal said. “When NEE changed its tune, issued its new risk disclosure, and announced that Silagy would be out as CEO, coupled with his unorthodox severance agreement, the stock plunged not because NEE or FPL employees were charged with illegal conduct, but because there was a connection that could lead to reputational damage to NEE — precisely what was previously denied.”
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But citing the November 2022 filing, Cannon concluded that the January 2023 filing about risks to NextEra Energy did not reveal new information. The November 2022 filing also disclosed that a complaint had been filed alleging violations of a federal campaign law.
“The statements in the November 3, 2022 disclosure are substantially similar to the statements in the January 25, 2023 purported corrective disclosure,” Cannon wrote. “The statements both reference the existence of campaign-finance allegations against defendants; they both reference the same complaint filed in federal court alleging such violations; and they both unequivocally state that such allegations may result in investigations that could have an adverse impact on NEE or FPL. Indeed, the January 25, 2023, disclosure expressly references the prior revelations on November 3, 2022.”
Cannon also wrote that the plaintiffs’ “effort to plead loss causation on the basis of Silagy’s retirement fails. As lead plaintiffs acknowledge, the retirement of a CEO, by itself, is insufficient to establish loss causation.”
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