Xcel faces possible class-action lawsuit over stock, bondsEric Wieffering Star Tribune Published Oct 5, 2002 UTIL05 John Coldagelli did more than fume as he watched his organization's investment in Xcel Energy wither. He got on the Internet and found a Philadelphia law firm that was looking for unhappy investors for a possible class-action lawsuit."I called them and told them, 'If you're going to sue, I want in,' " said Coldagelli, who is secretary-treasurer of Catholic Workman, a New Prague-based fraternal organization.Catholic Workman, which sells life insurance and annuities to Catholics in rural areas, filed its suit in U.S. District Court in Minneapolis earlier this week.The suit alleges the Xcel used fraudulent financial statements to prop up the value of its stock and bonds, and did not disclose the true nature of the financial difficulties facing NRG Energy, its wholesale power subsidiary."There's a disease called greed that has infected corporate America," said Carol Gilden, a lawyer with the Chicago law firm that is trying to have the suit converted into a class action. "Companies like Xcel were withholding information from the market, trying to use these sham transactions to boost their stock price."An Xcel spokesman said the company could not comment because it had not seen the lawsuit.Catholic Workman bought $200,373 worth of Xcel stock earlier this year, when the shares were trading between $21.39 and $23.40. The stock closed at $8.59 on Friday, making its investment worth about $77,600, a decline of 61 percent.Last March, Catholic Workman invested $600,000 in NRG bonds. The bonds, investment grade at the time, have since been reduced to junk status because of NRG's ongoing financial difficulties. They trade for about 25 cents on the dollar.Catholic Workman has 16,000 members and assets of about $53 million. Coldagelli said the firm's investment approach is conservative -- it rarely buys stocks, preferring instead investment-grade bonds.A number of shareholder suits have been filed against Xcel, but this action is the first to be filed over NRG's bonds.Xcel and NRG were rocked by bad news in the months after Catholic Workman's investment.In May, for example, in the wake of the Enron fallout, Xcel admitted that it had participated in "round trip" trades with Reliant Energy.But Xcel denied that those activities represented illegal "wash" trades designed to boost revenue. Both the Securities and Exchange Commission and the Commodities Future Trading Commission are investigating.NRG, meanwhile, is on the verge of bankruptcy. The company is trying to restructure more than $9 billion in debt, and it has defaulted on one $800 million bond issue.NRG also has been sued for its alleged role in the California energy crisis.
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