Reply #23: Enron Settlements Hit Record $7 Billion [View All]

http://www.cfo.com/article.cfm/4245836/c_4246664?f=homex_todayinfinance

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The amount tops the $6.1 billion awarded to WorldCom investors, making the Enron settlements the largest sum ever recovered in a group of securities class-action lawsuits.

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Through its Enron-related suits, the University of California has also recovered $2.2 billion from JPMorganChase, $2 billion from Citigroup, $222.5 million from Lehman Brothers, $69 million from Bank of America, $168 million from Enron's outside directors, and $32 million from Andersen Worldwide. The university will also secure a distribution of about $32 million for investors through the bankruptcy proceeding for the LJM2 partnership that was used as part of the Enron scheme to hide losses and inflate earnings.

"This settlement demonstrates that the University's strategy of aggressively pursuing the defendants is working," said Lerach. "We continue to pursue other defendants, including other banks that have been charged with knowingly participating in the scheme to defraud Enron investors."

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The remaining defendants in the investors' lawsuit include Merrill Lynch, Credit Suisse First Boston, Barclays Bank, Deutsche Bank, Toronto-Dominion Bank, Royal Bank of Canada, and the Royal Bank of Scotland.

The banks are accused of setting up false investments in secretly controlled Enron partnerships, using offshore companies to disguise loans, and facilitating phony sales of phantom Enron assets. As a result, Enron executives were able to deceive investors by reporting increased cash flow from operations and by moving billions of dollars of debt off Enron's balance sheet, thereby artificially inflating securities prices, according to Lerach.

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