Edison drops as Muddy Waters alleges willful misconduct in Eaton Fire case (updated)

Eaton

14/10/2026 10:06

Updates October 13 story with company's comments
Oct 13 (Reuters) - Edison International EIX.N shares fell over 3% on Tuesday after short seller Muddy Waters said it had uncovered new information suggesting the utility acted with "conscious" or "willful" disregard in the Eaton Fire.
The investment firm said Edison could face at least $4 billion in fire-related damages, with potential liability reaching about $20 billion if a court determines the firm's conduct amounted to willful misconduct.

Here are more details:
Muddy Waters said the utility's Southern California Edison unit failed to fix deficiencies in a wildfire risk model despite allegedly knowing for about five years that it could not adequately account for high-wind conditions.
The unit faces multiple lawsuits alleging its electrical equipment started the Eaton Fire, which ignited on January 7, 2025, in the Los Angeles area.
"We remain confident we will be able to show we acted as a reasonable utility would in maintaining the system in a safe manner," Edison spokesperson David Eisenhauer said.
Edison has previously said it is cooperating with investigations into the cause of the fire and denied negligence or wrongdoing.
Muddy Waters said the utility's failure to address the modeling issues increased wildfire risks during extreme wind events and was a factor in its assessment of the company's potential exposure.

 (Reporting by Pooja Menon and Pranav Mathur in Bengaluru; Editing by Vijay Kishore and Leroy Leo)
 ((Pooja.Menon@thomsonreuters.com;))