Bloomberg Utility Bond Manipulation Lawsuit
Electricity customers in California and Texas sued Bloomberg, L.P., and Bloomberg Index Services, Ltd. (“Bloomberg”) in a proposed class action lawsuit on June 7, 2024. The plaintiffs claim the company reclassified recovery bonds issued by utility companies, which seemingly elevated their risk and increased interest rates. The customers allege this action benefited institutional investors at the expense of electricity customers who were hit with increased costs on their monthly electric bills.
If you have been affected by Bloomberg’s actions, we want to help you. Our firm filed this lawsuit, so we have been involved in this case. At Paul LLP Trial Attorneys, you can expect tenacious advocacy with a personalized touch. The legal process can be confusing, particularly regarding a class action matter. We will help discern whether you can join the class, thoroughly assess your losses, and guide you through the litigation. Contact us today to get started with your case.
What Are Recovery Bonds?
Utility companies issue recovery bonds to fund large infrastructure projects. Investors purchase the bonds, and electricity customers repay the bond amounts (plus interest) in charges on their monthly bills. In this case, the subject bonds were purportedly intended to help rebuild from damage caused by California wildfires and the 2021 Texas winter storm known as Uri.
Who Filed Suit?
The plaintiffs in the Bloomberg lawsuit are Southern California Edison (“SCE”), the Electric Reliability Council of Texas (ERCOT), and Pacific Gas & Electric Co. (PG&E) electricity customers. They argue that the reclassification of the recovery bonds resulted in higher investment returns for Bloomberg’s investors and that higher monthly repayment charges were passed along to them.
The plaintiffs propose three classes for SCE, PG&E, and ERCOT customers, of which they will be the class representatives. In the suit, the plaintiffs claim that Bloomberg is liable for negligence and contract interference, among other claims.
Why Was Bloomberg Sued?
The Complaint alleges that in mid-2022, Bloomberg intentionally misclassified recovery bonds, causing millions of electricity consumers to pay inflated interest rates. The case involves three recovery bond issuances: two in California, issued by PG&E and SCE, and one in Texas, issued by ERCOT. As noted above, the named plaintiffs are customers of these companies.
Bloomberg initially classified the recovery bonds as corporate bonds. In general, electricity customers repay the bonds via monthly charges on their bills, so they carry little, if any, risk. So, as long as the utility delivers electricity in its territory, the customers repay the bonds. In 2022, however, Bloomberg gave in to the pressure from its institutional investor clients who wanted a higher return on the recovery bonds. Although nothing changed to make these bonds riskier or otherwise materially different, Bloomberg allegedly disregarded its best indexing practices and the law in reclassifying utility recovery bonds from “corporate bonds” to “asset-backed securities.” This was done despite the Securities Exchange Commission (SEC) confirming in 2007 that recovery bonds are not asset-back securities. Recovery bonds differ from asset-backed securities in several ways, which Bloomberg previously acknowledged by consistently classifying them as corporate bonds.
The Complaint alleges that Bloomberg knew misclassifying the bonds would increase the perceived risk of the bonds. As such, the pool of investors permitted to purchase the bonds would shrink. Bloomberg also allegedly knew that the interest rates on the bonds would rise, which would cause electricity customers, most of whom are ordinary, everyday people just trying to make ends meet, to pay inflated interest while investors profited. As such, the suit contends that Bloomberg’s misclassification has improperly increased the monthly electric utility payments for tens of millions of people in California and Texas for the next approximately 20 years.
When Did the Reclassification Occur?
The electricity customers claim Bloomberg made announcements in 2022 indicating that recovery bonds would be reclassified in advance of the then-upcoming issuances by SCE, PG&E, and ERCOT. On June 8, 2022, Bloomberg announced an unusual mid-year review of corporate bonds. Less than a month later, on July 7, 2022, Bloomberg announced that recovery bonds would be reclassified as asset-backed securities.
The Complaint alleges that the timing of these announcements was intended to increase the interest rate on recovery bonds issued even before formal reclassification. The increased interest rates led to higher profits for Bloomberg’s investors at the expense of the electricity customers.
How Can an Attorney Help You If Bloomberg Has Victimized You?
The Bloomberg Utility Bond Manipulation Lawsuit is a class action suit that affects thousands of people. How do you know whether Bloomberg’s illegal actions have damaged you? The attorneys at Paul LLP Trial Attorneys are here to help you discern whether you are a rightful part of the class. We will assess your eligibility by reviewing your status as a customer of one of the plaintiff entities, the period for which you received electricity services, and the amounts you were billed.
If we determine you are eligible to join the class, you can rest assured we will fight to help you recover your losses from the inflated electricity costs you paid due to Bloomberg’s illegal and unethical business practices. We will gather the necessary evidence and assist you in joining the class action we have already filed.
Call Paul LLP Trial Attorneys Today
At Paul LLP Trial Attorneys, our practice is focused on complex commercial and consumer contingent fee litigation. This case is no different. If you have overpaid for your electricity services, call Paul LLP Trial Attorneys today. We will carefully review your case to determine whether you can join the Bloomberg Utility Bond Manipulation lawsuit. We will assess the total value of your losses as we prepare to fight vigorously for your interests and the compensation you deserve.
Unsure of what steps to take next? Contact Paul LLP Trial Attorneys online or at (816) 984-8100 to get started with your case. We are here to answer your questions and guide you through the litigation process every step of the way.
