Coal Tattoo

Testimony continues about post-UBB stock drop

Prosecutors in the Don Blankenship criminal case continued this morning with testimony about the securities fraud charges against the former Massey Energy CEO.

FrankTorchio-1Frank Torchio, a financial expert testifying for the government, told jurors about a study he performed which examined Massey’s stock price changes after the April 5, 2010 explosion at the company’s Upper Big Branch Mine.

Torchio explained that Massey’s stock price plummeted on April 6 and 7, with the company losing about $900 million in value in just two days.

The stock price rebounded somewhat on April 9, when Massey told investors the company does not condone safety violations.

But then in late April, when National Public Radio reported the existence on an FBI criminal investigation of the mine explosion, Massey shares dropped again, costing about $500 million in value, Torchio said.

Torchio said Massey stock dropped again a few weeks later, when the U.S. Department of Justice confirmed the existence of the criminal probe. Massey lost $382 million in equity after that disclosure, Torchio said.

Torchio is the 26th witness as the trial begins its 22nd day. Along with federal charges of conspiracy to violate mine safety laws, Blankenship is accused of issuing a statement saying Massey did not condone safety violations to try to stop the initial Massey stock drop after the blast.