Capital Markets

TXU Settles Whistle-Blower Case

A former vice president filed suit two years ago, claiming he was fired after questioning accounting practices and overly aggressive earnings manag...
Stephen TaubJune 14, 2005

TXU Corp. has settled a whistle-blower case brought by a former finance executive who raised questions about the utility’s accounting practices, according to the Associated Press. Terms of the settlement were not disclosed.

William J. Murray, a one-time senior vice president for capital management of TXU Energy, was fired in August 2002, according to the wire service. He sued for wrongful termination under Section 806 of the Sarbanes-Oxley Act, a provision designed to protect whistle-blowers.

The trial was scheduled to begin yesterday in federal district court in Dallas, where TXU is based. Last week, the judge ruled that Murray was not entitled to a jury trial or punitive damages, according to the report. His attorney, Hal Gillespie, told the AP that the judge’s ruling against a jury trial played a role in settling the case.

Murray filed suit two years ago, claiming he was fired by TXU after bringing dubious accounting practices to the attention of his supervisors and alleging that chief financial officer Mike McNally was overly aggressive in managing the company’s earnings. According to the wire service, Murray added in his lawsuit that company officials did not disclose to investors the possibility of multibillion-dollar losses in TXU’s European operations. TXU’s share price fell 75 percent when the European unit collapsed in late 2002.

TXU had argued that it eliminated Murray’s job as part of a wider restructuring plan at the company, according to the AP.

In January, TXU agreed to settle a class-action lawsuit by paying shareholders $150 million and instituting corporate governance changes. The company also agreed to pay $220 million to creditors of the European unit, according to the AP.