Insurers to pay utility’s shareholder derivative settlement

Insurers will pay an Ohio utility’s $180 million settlement of three shareholder derivative lawsuits involving a bribery scandal.

Akron, Ohio-based FirstEnergy Corp. announced the settlement in the case, which had previously led to a criminal indictment by the U.S. Attorney for the Southern District of Ohio, on Thursday.

A FirstEnergy spokeswoman said in a statement the utility has not shared the names of the insurers involved in the settlement.

The settlement was first reported by The D&O Diary, which said it is among the largest shareholder derivative lawsuit settlements ever.

The settlement resolves shareholder derivative lawsuits filed in U.S. District Courts for the Southern District of Ohio and the Northern District of Ohio and in state court, FirstEnergy said in its statement.

According to the complaint filed in U.S. District Court in Columbus in  September 2020 in Employees Retirement System of the City of St. Louis v. Charles E. Jones et al., FirstEnergy illegally funded more than $60 million to the Ohio Speaker of the House, Larry Householder, and other public officials, which led to a $1.3 billion bailout for the utility.

In July 2021, FirstEnergy agreed to pay $230 million to settle U.S. government charges it conspired to pay millions of dollars to elected state officials to pursue legislation that would benefit the company, the utility and the Department of Justice said.

FirstEnergy admitted it made the payments, the Acting U.S. Attorney for the Southern District of Ohio said in its statement at the time. The company also admitted it conspired with individuals to conceal the source and nature of the payments from the public, the statement said.

FirstEnergy said in its statement Thursday that the $180 million payment is to be paid by insurers after court approval, less any court-ordered attorneys fees awarded to plaintiffs.

Among other provisions of the settlement, six members of the utility’s board who have served a minimum of five years will not stand for re-election and a special committee will be formed to begin a review process of the current executive team.

Plaintiff attorneys in the case did not respond to a request for comment.

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