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NuScale: Small Reactors, Big Legal Problems

By Kennedy Maize -- December 5, 2023

Small modular nuclear reactor developer NuScale Power, rocked by collapse of its only project and hammered by a freefall in its share prices, is facing another major threat. Boston-based law firm Block & Leviton announced Monday (Nov. 27) that it has filed a “class-action shareholder lawsuit in federal court, alleging the company ‘made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects.’”

Those who have followed NuScale closely have known that the company’s deal with the Utah Associated Municipal Power Systems (UAMPS) was in trouble well before its cancellation announced Nov. 8. Just before UAMPS walked out of the deal to supply six 77-MW small modular reactors to serve cities in 16 western states, NuScale announced a deal with a company trying to develop data centers for crypto currency mining operations. That deal generated more skepticism about Oregon-based NuScale, as the announcement contained no financial details and did not generate an 8k filing at the Securities and Exchange Commission.

The suit in U.S. District Court for the District of Oregon (Case 3:2023cv01689) was initially bought Nov. 15 by investor Scott Sigman against current and former NuScale officers John Hopkins, Chris Colbert, Robert Hamady and Clayton Scott. Hopkins is CEO, Hamady is NuScale chief financial officer, and Scott is chief commercial officer. Colbert was CFO before he left the company in August.

According to Securities and Exchange Commission documents, on Oct. 13 Colbert sold 75,585 shares of NuScale stock (NYSE:SMR) for $5.77 per share, yielding some $436,216. That was six days before Iceberg Research, an investment analysis firm specializing in short selling, hammered the company’s financial condition, including noting that the UAMPS deal was the only realistic business prospect the Oregon-based reactor developer had in hand and that the company was bleeding cash. The company’s shares fell to $2.08, compared to over $15/share in August 2022. NuScale’s third quarter 2023 revenue was $7 million with a net loss of $58.3 million, and $196.6 million cash on hand.

In a news release, Brock & Leviton, a firm that specializes in investor suits, said the litigation covers “investors that incurred damages on their purchases in NuScale Power Corporation securities between March 15, 2023 and October 19, 2023, inclusive.” The firm advised potential plaintiffs that “a class has not yet been certified, and until certification occurs, you are not represented by an attorney. If you choose to take no action, you can remain an absent class member.”

The Sigman filing in Oregon set off a flurry of actions by law firms seeking to line up clients in the litigation, including, among others, Brock & Leviton; Bronstein, Gewirtz, and Grossman in Manhattan; Robbins Geller Rudman & Dowd in San Diego; and Johnson Fistel, also of San Diego. All are seeking “lead plaintiffs” in the pending litigation.

Robins Geller, a major securities fraud litigant, explains the lawyers’ feeding frenzy, “The Private Securities Litigation Reform Act of 1995 permits any investor who purchased or acquired NuScale securities during the Class Period to seek appointment as lead plaintiff of the NuScale class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the NuScale class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the NuScale class action lawsuit. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff of the NuScale class action lawsuit.”

Brock & Leviton laid out the grounds for the lawsuit. NuScale, the firm wrote, “misled investors by failing to disclose that

(1) due to the impact of inflationary pressures on the cost of construction and power, the Company and UAMPS would be unable to sign up enough subscribers to fulfill the CFPP (Carbon Free Power Project);

(2) Standard Power did not have the financial ability to support its agreement with NuScale; and

(3) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.”

Oregon Public Radio reported, “Over the course of several investor calls in 2023, NuScale executives told investors progress acquiring the needed customer base was ‘looking pretty good’ and that ‘we continue to make progress.’”

NuScale has issued no comment on the lawsuit.


This was originally published at The Quad Report, commentary on energy policy and politics.

One Comment for “NuScale: Small Reactors, Big Legal Problems”

  1. Kevin  

    Sell the NuScale design to the Chinese. That will get some attention.

    Why wouldn’t the prototype be the most expensive unit? The NuScale costs are being compared to wind and solar which don’t include the costs of backup/storage which probably come close to doubling their standalone costs.


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