$6.6 Billion Added to Defrauded Enron Investors’ Pot Total Recovery to Class Members Reaches $7.3 Billion
In a major victory for shareholders, a federal judge gave final approval for three banks to pay $6.6 billion to settle plaintiff’s securities class action lawsuit over the banks’ alleged involvement in the Enron financial scandal.
U.S. District Court Judge Melinda Harmon approved the settlement arrangements with the Canadian Imperial Bank of Commerce (CIBC), JPMorgan Chase & Co. and Citigroup Inc. These new settlements are the largest yet to arise from the Enron securities fraud lawsuits, with CIBC paying $2.4 billion, JPMorgan paying $2.2 billion and Citigroup a further $2 billion. The total settlement value achieved now registers $7.3 billion, adding to previous settlements by Bank of America, Lehman Brothers and Andersen Worldwide.
William S. Lerach, who represents lead plaintiff The Regents of the University of California, noted that the settlement pool is so large that the interest accruing as the funds await distribution adds up to more than $500,000 per day. “To date we have achieved the largest recovery ever by way of the Enron class action suit. However, much more work remains to be done to take the case to trial and achieve additional recoveries for the victims of this terrible fraud,” said Lerach.
Judge Harmon’s approval arrived just prior to the announcement of verdicts for the defendants in the Enron criminal trial. Enron founder Kenneth Lay and former CEO Jeffrey Skilling were both convicted of fraud and conspiracy. Lerach Coughlin attorneys noted that the ongoing class action litigation also includes Lay and Skilling as defendants. The securities fraud class action is scheduled to go to trial October 16.
Although the SEC did not take any formal action against Enron’s former directors, Enron’s investors sued them, alleging that all 18 had engaged in insider trading by selling shares using illegal insider information about Enron’s murky financial structures. Last year, ten directors agreed to pay a total of $13 million – or 10% of their Enron stock-trading profit – out of their own pockets to settle the shareholder lawsuit.
Several other banking and brokerage firms that have not yet reached settlement agreements regarding their alleged role in helping Enron manipulate earnings include Merrill Lynch & Co., Barclays PLC, Toronto-Dominion Bank, Royal Bank of Canada and the Royal Bank of Scotland Group PLC. Judge Harmon recently dismissed plaintiff’s claims against Deutsche Bank AG; plaintiff’s request for reconsideration of that dismissal is pending.
In re Enron Corp. Sec. Litig., Case No. H-01-3624 (S.D. Tex. May 24, 2006).
QOUTE --- "The firm is comprised of probably the most prominent securities class action attorneys in the country.... Counsel’s conduct in zealously and efficiently prosecuting this litigation with commitment of substantial resources to that goal evidences those qualities throughout this suit. Since the beginning they have propelled the Newby litigation forward. They have established the website by which attorneys serve and communicate with each other, established the central depository for discovery materials, negotiated an agreed, organized, nonduplicative, pared-down discovery schedule, and negotiated complex settlements with a number of defendants.”
Enron Judge Melinda Harmon Preliminary Class Certification Order