Diamond McCarthy Taylor Finley Bryant & Lee Announces Investor Lawsuit Against TXU Corporation Lawsuit Alleges Securities Fraud by the Utility Giant

An investor has sued TXU Corporation (NYSE: TXU) and two of its top officers, accusing the energy company of defrauding its shareholders, Diamond McCarthy Taylor Finley Bryant & Lee said.

DALLAS, Oct. 18, 2002 -- An investor has sued TXU Corporation (NYSE: TXU) and two of its top officers, accusing the energy company of defrauding its shareholders, Diamond McCarthy Taylor Finley Bryant & Lee said.

The complaint was filed in U.S. District Court for the Northern District of Texas, Dallas Division. The lawsuit seeks damages for violations of federal securities laws on behalf of all investors who bought TXU securities from Jan. 31-Oct. 11, 2002, (the Class Period).

The lawsuit alleges that the defendants pumped up" the companys stock price by misrepresenting to the investing public the condition of TXUs European operations throughout the Class Period.
The complaint says TXU lacked a reasonable basis for its earning projections for fiscal 2002 and 2003. Specifically, the defendants misled or failed to tell investors that:

•   TXUs operations in Europe and, specifically, those in the United Kingdom were plagued with deficient, inadequate, and faulty internal and financial controls;

•   TXUs risk management in Europe was virtually non-existent, and there was no means of addressing the risk to TXU from the UKs unregulated electricity market;

•   At least one credit facility worth approximately $500 million contained cross-default" provisions between TXU Europe and TXU;

•   TXUs UK operations used wholesale electricity structured transactions" to meet earnings goals in violation of Generally Accepted Accounting Principles by shifting earnings and profits from one quarterly period to another;

•   The companys UK operations had entered into and carried long-term electricity purchase contracts that were out of the money" by some $700 million; and

•   The European operations were impaired and overvalued by billions of dollars.

According to the lawsuit, the truth about TXU began to emerge on Oct. 4, 2002, when the company said it was revising its earnings expectations for fiscal 2002 and 2003, and in the spate of news articles and analyst reports that followed. The company revealed more problems in an Oct. 7, 2002, conference call with analysts.

TXUs stock plummeted following these disclosures, falling from a close of $32.90 per share on Oct. 3, 2002, to $13.85 on Oct. 8, 2002.
To review the complaint and information about becoming a lead plaintiff, please visit the website of co-counsel for the plaintiff investor at www.bermanesq.com.

Note for potential plaintiffs: If you purchased TXU securities during the period Jan. 31-Oct. 11, 2002, you may wish to contact the attorneys of Diamond McCarthy to discuss your rights and interests.

If you wish to apply to be lead plaintiff in this action, a motion must be filed on your behalf with the court no later than Dec. 13, 2002. You may contact the attorneys at Diamond McCarthy to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action. You may also retain counsel of your choice. To be a member of the class, however, you need not take any action at this time.

Diamond McCarthy prosecutes who killed the company" litigation, including class actions, nationwide on behalf of institutions and individuals, and trustees. The firm has offices in Dallas, Houston and Austin, Texas.

If you would like more information about the lawsuit against TXU contact Rhonda Reddick at (800) 559-4534 or Melody Townsel at (214) 948-2000.