What happened

Shares of energy company Vistra Energy (NYSE:VST) tumbled 13.3% in December, according to data provided by S&P Global Market Intelligence. That pretty much wiped out the company's gains for 2019, and its share price finished up just 0.4% for the year.

So what

The market was already pretty bearish on Vistra's stock. After the company's Q3 2019 earnings call in November, shares also took a hit.

A man in a suit ducks beneath a drawing of a broken arrow with its point heading downward..

A single negative news story can have a big impact on a stock. That seems to have happened with Vistra in December. Image source: Getty Images.

Based in Texas, Vistra has been a longtime electricity provider in the state. However, in recent years, the company has gotten acquisitive, purchasing retail energy companies -- which are non-regulated third-party energy providers that consumers can choose to provide their electricity and gas rather than the local "default" regulated utility.

In 2018, for example, Vistra merged with the Midwestern retail energy company Dynegy, and in July, completed the acquisition of Crius Energy Trust, which owned several other retail energy companies in 19 states and the District of Columbia, including a company called Maryland Gas and Electric.

On December 3, the Baltimore Sun reported that the Maryland Office of People's Counsel -- the state's utility consumer advocate -- had lodged a complaint with the Maryland Public Service Commission (MPSC) against Maryland Gas and Electric. Among other accusations, the complaint includes more than 130 allegations of identity theft, where salespeople allegedly obtained utility account numbers from consumers, which the company is accused of using to "fraudulently tell utilities it had signed customers to gas or electric contracts."

In response, Vistra told the Sun that it doesn't comment on pending regulatory actions, "but added that the allegations took place before Vistra bought Maryland Gas's previous parent, Crius Energy Trust, in July." The whole situation seems to have spooked investors, who sold off the stock.

Now what

Regardless of whether Vistra owned Maryland Gas and Electric when the alleged identity theft was taking place, it owns the company now and is on the hook for whatever punishment the MPSC might hand down. Such punishments can be severe: When another retail energy company, SmartOne Energy, was found to have enrolled customers without their consent, the MPSC revoked its Maryland business license and levied a $561,000 civil penalty against the company.

A $500,00 fine may not seem like much for Vistra, a company with a $11.2 billion market cap, but the case is currently in litigation, so there's no telling what might happen. Revocation of the company's Maryland business license, though, would be a big blow. Plus, if Crius -- which had operations in 18 other states -- is found to have been using this kind of unsavory business practice in Maryland, there's no telling where else similar issues might have occurred. Now, Vistra would be on the hook for them.

Investors probably want to steer clear until this mess is resolved.