BOSTON -- Massachusetts has reached a $265 million settlement with mining company Alpha Appalachia Holdings Inc. for allegedly misrepresenting its safety record in an effort to artificially inflate its stock price, state officials announced Monday.
The Pension Reserves Investment Management Board, which oversees public pension investments in Massachusetts, was the lead plaintiff in a class-action lawsuit brought by multiple investors against the company formerly known as Massey Energy Co. Parent company Alpha Natural Resources bought Massey for $7.1 billion in 2011.
"Businesses need to be open and transparent to the people who invest in them, and this case sends a clear message that misrepresentations and bad business practices will not be tolerated and will have severe consequences," said Massachusetts Treasurer Steven Grossman, who's also chairman of the investment board.
Investors' share of the settlement will be proportional to their percentage of shares damaged in value as a result of the misstatements by Massey, officials said.
"This settlement returns significant taxpayer money to the state pension system that was lost as a result of misleading information," state Attorney General Martha Coakley said. "Businesses must be truthful and honest with investors and our office will continue working to ensure we protect these important public funds."
The plaintiffs alleged that Massey told investors it strongly adhered to proper safety procedures, but the company had a culture of safety violations, leading to an explosion at the Upper Big Branch coal mine in West Virginia that killed 29 people in April 2010. The investigation uncovered hundreds of safety violations, causing the company's stock to plunge.
Multiple investigations found the blast was sparked by worn and broken equipment, fueled by accumulations of methane gas and coal dust, and allowed to spread because of clogged and broken water sprayers.
Investigators also found "systematic, intentional and aggressive efforts" to hide problems and throw off inspectors, including the falsification of safety records, the federal Mine Safety and Health Administration said.
A call to Bristol, Va.-based parent company Alpha Natural Resources was not immediately returned Monday.