The Exelon securities litigation settlement is a $173 million cash resolution of investor claims that Exelon Corporation hid a bribery scheme run through its ComEd subsidiary. It covers people who bought Exelon common stock between February 8, 2019, and October 31, 2019, and the claim deadline was September 28, 2023.1CourtListener. Flynn v. Exelon Corporation Judge Virginia Kendall granted final approval on September 7, 2023, and only investors who filed a timely proof of claim can be paid.2Robbins Geller Rudman & Dowd LLP. Flynn v. Exelon Corporation – Final Judgment Approving Settlement
What the Case Was About
ComEd, Exelon’s Illinois utility subsidiary, arranged payments, subcontracts, and no-work jobs for associates of a powerful state legislator in exchange for favorable energy legislation. In July 2020, ComEd entered a three-year deferred prosecution agreement with the Justice Department and agreed to pay $200 million.3Exelon Corporation. ComEd Reaches Agreement to Resolve Justice Department Investigation
Investors alleged Exelon knew and stayed quiet. Two disclosures pushed the stock down: on October 16, 2019, shares fell about 4.6% after Exelon Utilities CEO Anne Pramaggiore departed, and on October 31, 2019, they fell about 2.5% after Exelon disclosed an SEC investigation into its lobbying. The lawsuit brought claims under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.4eCFR. 17 CFR 240.10b-5 – Employment of Manipulative and Deceptive Devices
Who Was in the Class
The settlement class covered anyone who bought or acquired Exelon common stock between February 8, 2019, and October 31, 2019, and lost money as a result.2Robbins Geller Rudman & Dowd LLP. Flynn v. Exelon Corporation – Final Judgment Approving Settlement Purchases outside those dates did not qualify. The named defendants, Exelon’s current and former officers and directors, and their immediate family members were excluded automatically.
Buying during the window was not enough on its own. Under the plan of allocation, anyone who bought class-period shares and sold every one of them before July 19, 2019, had a recognized loss of zero, because the market had not yet absorbed any corrective information.5Levi & Korsinsky LLP. Exelon Securities Litigation – Settlement Notice Those investors were technically class members but were entitled to nothing.
How Payments Were Calculated
Each eligible investor’s “Recognized Loss Amount” turned on when shares were bought, when they were sold, and the price at both points. The plan set different artificial inflation values for shares purchased on different class-period dates, then applied tiered rules based on the sale date:
- Sold before July 19, 2019: no recognized loss.
- Sold between July 19, 2019, and October 30, 2019: the lesser of the drop in inflation between purchase and sale, or the actual per-share loss.
- Sold between October 31, 2019, and January 28, 2020: the smallest of the inflation at purchase, the actual per-share loss, or the difference between the purchase price and a declining average closing price.
- Still held after January 28, 2020: the lesser of the inflation at purchase, or the difference between the purchase price and $45.35 per share.
The claims administrator then looked at each investor’s Exelon trades across the class period as a whole. If the investor came out ahead overall, they received nothing, even if individual trades lost money. Eligible investors were paid a pro rata share of the net fund, and no payment below $10.00 was distributed.5Levi & Korsinsky LLP. Exelon Securities Litigation – Settlement Notice
What Came Off the Top
The $173 million was not the amount split among investors. Lead counsel requested up to 26% of the fund in attorney fees plus up to $400,000 in litigation expenses. Claims administration, notice costs, and applicable taxes were also deducted before payouts. The settlement notice estimated that at a 100% claim rate, the average recovery would be roughly $0.80 per damaged share before deductions and about $0.59 per share after fees and expenses.5Levi & Korsinsky LLP. Exelon Securities Litigation – Settlement Notice Real-world claim rates in securities class actions are usually well below 100%, so per-share recoveries for actual filers were likely higher.
If You Missed the September 28, 2023 Deadline
Claims went to Gilardi & Co. LLC, and each required a Proof of Claim and Release form documenting every Exelon purchase and sale during the class period, backed by brokerage statements or trade confirmations. The deadline to file was September 28, 2023. The deadline to opt out entirely was August 17, 2023.6Exelon Securities Litigation. Exelon Securities Litigation – Settlement Notice
Investors who did neither are in the worst position. They cannot collect from the fund because they did not file a claim, and they cannot sue Exelon separately over the same conduct because the final judgment released those claims on their behalf.
Taxes on a Payment You Received
The IRS treats securities settlement payments under an “origin of claim” rule: the money is taxed the way the underlying loss would have been. For most investors here, the settlement compensates for a decline in stock value, which would have been a capital loss, so the recovery is generally treated as a capital gain. If you already claimed a capital loss on the Exelon shares in a prior tax year, the settlement payment effectively reverses part of that loss and has to be reported as income.
Claims administrators in these cases typically do not issue 1099 forms, but the reporting obligation still sits with the investor. Anyone who received a check should run the numbers past a tax professional, particularly if losses on the original shares were already deducted.