UC Reaches $13.5 Million Settlement Kirkland & Ellis in Enron Securities Class Action
The University of California Board of Regents today (Sep. 21) approved a $13.5 million settlement with the law firm of Kirkland & Ellis LLP in the Enron Corp. securities litigation. The settlement is subject to approval by the court. UC is lead plaintiff representing a class of Enron investors who lost tens of billions of dollars.
Kirkland & Ellis served as legal counsel for a number of the off-books entities through which Enron was able to manipulate its financial statements. The court dismissed all of the claims against Kirkland & Ellis by order dated December 19, 2002, but that order remained subject to appeal.
With this latest settlement, UC has now obtained more than $7.3 billion (including interest) for Enron investors, including $2.4 billion from Canadian Imperial Bank of Commerce, $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. UC will also secure a distribution of $37 million for investors through the bankruptcy proceeding for the LJM2 partnership involved in the Enron scheme.
Remaining defendants in the investors’ lawsuit include former officers of Enron, the law firm of Vinson & Elkins and a number of major financial institutions that allegedly set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated phony sales of phantom Enron assets. As a result, Enron executives were allegedly 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.
In February 2002, UC was named lead plaintiff in the Enron shareholders’ class action suit previously filed against top executives of Enron Corp. and its accounting firm, Arthur Andersen LLP. The university filed a consolidated complaint on April 8, 2002, adding nine banks and two law firms as defendants in the case. In April 2003, U.S. District Court Judge Melinda Harmon completed her rulings on the various defendants’ motions to dismiss and lifted the stay on discovery. Following those rulings, UC filed an amended complaint on May 14, 2003.
Other institutional investors acting as representative plaintiffs on behalf of Enron investors include Washington State Investment Board, the Amalgamated Bank and its Long View Funds, San Francisco City and County Employees’ Retirement System, Employer-Teamsters Local Nos. 175 & 505 Pension Trust Fund, Hawaii Laborers Pension Plan, Greenville Plumbers Pension Plan, and Archdiocese of Milwaukee.
Trial in the case is slated to begin in Houston on April 9, 2007.
For more background on the Enron lawsuit: