SEC Charges FirstEnergy Corp. with Fraud.
The Securities and Exchange Commission today charged FirstEnergy Corp. ("FirstEnergy") with fraud in connection with a multi-year political corruption scheme in which FirstEnergy and affiliates made payments to an entity controlled by former Speaker of the Ohio House of Representatives, Larry Householder, in exchange for official action benefitting FirstEnergy's business interests. FirstEnergy agreed to settle the charges and pay a civil penalty of $100 million. The SEC also brought charges today against former FirstEnergy CEO, Charles E. Jones, in a separate litigated action.
According to the SEC's order against FirstEnergy, between 2017 and 2020, FirstEnergy and affiliates made approximately $60 million in payments to a 501(c)(4) entity controlled by Householder in exchange for specific official action for the benefit of FirstEnergy and affiliates, including Householder's support in passing certain nuclear legislation. In July 2020, Householder was arrested in connection with his role in the scheme. The SEC's order finds that following Householder's arrest, FirstEnergy and Jones made a series of misrepresentations to investors about FirstEnergy's role in the political corruption scheme.
Additionally, the order finds that FirstEnergy failed to disclose material related party transactions with respect to payments FirstEnergy made to a 501(c)(4) organization funded and controlled in part by certain former FirstEnergy executives. The order also finds that FirstEnergy violated books and records and internal accounting controls provisions of the federal securities laws.FirstEnergy consented to the SEC's cease-and-desist order finding that it violated the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The order also finds that FirstEnergy violated Section 13(a) of the Exchange Act.
