Arthur Andersen Settlement Approved for Enron Investors
Saturday, March 10, 2007
Enron investors won final approval of a $72.5 million settlement resolving claims against Arthur Andersen, the defunct energy trader's former auditor.
U.S. District Judge Melinda Harmon in Houston approved the accord yesterday after attorneys for the investors said it was the most they could get from what is left of the accounting firm. Shareholders claimed Arthur Andersen helped Enron's former officials perpetrate frauds that cost investors as much as $40 billion.
"This is a very good settlement," Keith Park, a lawyer for the University of California regents, the lead plaintiffs in the class-action suit, told Harmon at a hearing yesterday. Investors also will get $2 million in accrued interest. The regents lost $145 million on Enron.
The settlement adds to the more than $7.3 billion that investors' lawyers have recovered from Enron's former lenders and lawyers. Citigroup, J.P. Morgan Chase and Canadian Imperial Bank of Commerce paid billions to settle claims that they helped inflate earnings and hide debt by accounting for it as loans.
Last month, Harmon approved a $13.5 million settlement with Kirkland & Ellis, a law firm that represented some partnerships that played a role in Enron's demise.
Patrick Dorton, a spokesman for Arthur Andersen, was not immediately available to comment on Harmon's decision. He said in November that the firm admitted no wrongdoing as part of the accord.
Enron, once the world's largest energy trader, had more than $68 billion in market value before its December 2001 bankruptcy filing wiped out thousands of jobs and at least $1 billion in retirement funds virtually overnight.
Investors claimed Arthur Andersen and lenders helped former Enron chairman Kenneth L. Lay and chief executive officer Jeffrey K. Skilling use off-the-books partnerships to manipulate the company's finances. Both were convicted of fraud and conspiracy charges in May. Lay died of a heart attack in July and Skilling was sentenced to more than 24 years in prison last month.
Arthur Andersen shut down its auditing practice and almost all of its offices after being convicted in 2002 of obstruction of justice for destroying e-mails related to Enron. The Supreme Court threw out the conviction in 2005, saying Harmon incorrectly instructed jurors about the law governing the case.
Andersen's workforce of 85,000 has dwindled to about 200 lawyers and administrators, who oversee litigation and manage its remaining sites, including a conference center near its Chicago headquarters.
Investors previously reached a $40 million settlement with Andersen Worldwide Societe Cooperative, the firm's foreign affiliates. The accord did not cover the parent company.