FirstEnergy to Pay $100M SEC Settlement as Former CEO Faces Civil Fraud Charges in Historic Ohio Bribery Scandal

In a significant development in Ohio’s largest corruption case, FirstEnergy has agreed to pay a $100 million civil penalty to settle charges with the Securities and Exchange Commission (SEC) related to the House Bill 6 bribery scandal. The settlement, announced in September 2024, comes as the SEC simultaneously filed civil fraud charges against former CEO Chuck Jones for allegedly misleading investors about the company’s role in the $60 million bribery scheme.

The Akron-based utility company was accused of violating antifraud provisions by misrepresenting its involvement in the political corruption scheme and failing to disclose related payments. The investigation revealed that FirstEnergy and its executives worked directly with former Ohio House Speaker Larry Householder to draft nuclear legislation that would ultimately become House Bill 6, which provided a $1 billion bailout for two nuclear power plants.

During the three-year scheme, former CEO Chuck Jones earned $54 million in compensation that the SEC deemed unethically obtained. The SEC’s complaint specifically cites Jones for telling the public that “FirstEnergy acted ethically in this matter” and “transparently,” statements that were later proved false. The company’s former top executive now faces both SEC charges and state corruption charges for his alleged role in the scandal.

This latest penalty adds to FirstEnergy’s mounting financial obligations related to the scandal. The company has already paid $230 million in 2021 to settle criminal charges with the U.S. Department of Justice, and recently agreed to a $20 million settlement with Ohio state prosecutors. In total, FirstEnergy has paid approximately $350 million in criminal and civil penalties related to the scandal.

The corruption case has had far-reaching consequences beyond financial penalties. Former House Speaker Larry Householder is currently serving a 20-year federal prison sentence for his role in orchestrating the scheme. The scandal also led to the death by suicide of Sam Randazzo, the former chair of the Public Utilities Commission of Ohio, who had been charged alongside Jones and former FirstEnergy Senior Vice President Michael Dowling.

FirstEnergy’s current leadership is attempting to distance the company from its troubled past. Brian X. Tierney, FirstEnergy’s president and CEO, stated, “We are pleased to have reached a resolution with the SEC as we continue to turn a new chapter. Our focus today is investing in our regulated electric companies to improve the customer experience and support the energy transition”.

The company has implemented substantial reforms, including establishing new compliance programs, revising its political activity policies, and restructuring its board and leadership. These changes aim to strengthen internal ethics programs and increase transparency throughout the organization.

The scandal has also had broader implications for FirstEnergy’s public image and operations. The company lost its naming rights deal for the Cleveland Browns’ stadium in April 2023 due to public pressure over the scandal. The venue has since been renamed following a new agreement with Huntington Bank.

As investigations continue, FirstEnergy is required to provide evidence, access to witnesses, and testimony in both the ongoing criminal cases against Jones and Dowling and the civil proceedings relating to the passage of House Bill 6. The resolution of these cases marks a significant milestone in Ohio’s efforts to address corporate corruption and ensure accountability in public utilities management.