An Oregon company that has been a global leader in small nuclear reactors is facing a lawsuit from shareholders who say top executives artificially inflated stock prices before cashing out.
Investors who purchased securities in NuScale Power Corp. earlier this year are suing the company, saying its top executives misled the public about the company’s financial solvency and success in advancing nuclear technology. They filed their legal complaint in the U.S. District Court of Oregon on Wednesday, alleging the company violated federal securities laws.
The company did not respond immediately to a request for comment.
NuScale, headquartered in Corvallis, aims to offer an alternative to traditional nuclear plants with smaller, factory-built reactors that are cheaper to build and safer to operate. They can also be a more climate-friendly option to burning fossil fuels to satisfy the world’s rapidly growing demands for electricity, particularly for power-hungry, AI-focused data centers.
FILE — An undated provided photo of the NuScale Energy Exploration Center at Oregon State University, where its small modular reactor technology was invented and researched.
Courtesy of Oregon State University
The lawsuit alleges that four NuScale executives intentionally overstated the company’s competitive advantage and financial health to inflate stock prices. It says those executives failed to disclose the company’s stalled projects as other nuclear companies advanced their own small nuclear reactor designs.
While stock prices were high, NuScale’s executives sold their shares for more than $3.25 million, the lawsuit says, even while they touted the company’s financial success.
Investors say they didn’t know the company’s two biggest projects were troubled until September, when UBS, a Swiss multinational bank, slashed NuScale’s price target from $10 per share to $6, citing a projected $700 million negative free cash flow.
In 2023, NuScale became the first American company to get federal approval for one of its designs. But it has hit major roadblocks in recent months.
The company had been exploring building reactors for the Tennessee Valley Authority, a federally owned electric corporation and the largest public power provider in the country. The Tennessee Valley Authority provides electricity to about 10 million people in seven southern states.
NuScale has yet to enter into a binding agreement with the utility, the lawsuit says. The Tennessee Valley Authority is also pursuing a separate small nuclear reactor through a competitor, GE Vernova Hitachi Nuclear Energy, a project that is further into the development process.
NuScale is also working with Romanian nuclear company Nuclearelectrica to build reactors in that country. In July, Nuclearelectrica announced “a number of conditions” were preventing it from moving forward, and it was considering alternative designs.
Shareholders are asking the court for a class-action lawsuit designation, jury trial, and a judgment requiring NuScale and the four executives compensate investors for their losses.
NuScale’s stock price fell 7.8% on Thursday, closing at $4.82 per share.
