Duke Energy faces class action suit on employee pensions

SEATTLE, Wash., July 17, 2002 — Duke Energy is finding itself to be in the hot seat following notification of a class action lawsuit on behalf of its employees regarding allegedly withheld financial information.

Keller Rohrback L.L.P. filed a 401(k) breach of fiduciary duty class action against Duke Energy Corp. on behalf of participants and beneficiaries of Duke Energy’s 401(k) retirement plan from January 1, 2000 through the present.

The complaint filed alleges that Duke Energy, and its plan administrators, breached their fiduciary duties of loyalty and prudence when financial information was withheld or concealed from the 401(k) plan participants. According to the complaint, employees were encouraged to continue investing in Duke stock in the plan. A copy of the filed complaint is at Keller Rohrback’s 401(k) website at: www.erisafraud.com.

In response to a May 31 informal request for information from the Securities and Exchange Commission (SEC), Duke put out a press release stating that it had found no evidence of any energy trades conducted to increase reported revenues or influence prices.

But it did find 23 paired transactions which had the apparent purpose of increasing volumes on the Intercontinental Exchange (ICE) electronic trading platform. Duke said none of the transactions was in the western market, so it did not release this information while FERC was investigating possible price manipulation in the west earlier this year.

The 23 transactions on ICE had no effect on Duke Energy’s earnings, the company said.

On May 17, Duke Energy announced it had “analyzed its trades for the three-year period from 1999 through 2001 to identify those trades which may have some of the characteristics of sell/buy-back trades.” The company had engaged in approximately $1 billion of “round-trip” energy trades, which provided no economic benefit for the company.

Duke Energy is still gathering information at the request of regulators.

Duke Energy is a diversified multinational energy company with an integrated network of energy assets and expertise. The company manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses — meeting the energy needs of customers throughout North America and in key markets around the world. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: http://www.duke-energy.com .

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