Enron Investors to Share $7.2 Billion Settlement
Wednesday, September 10, 2008
HOUSTON, Sept. 9 -- Enron shareholders and investors will split about $7 billion from financial institutions accused of participating in the fraud that caused the energy company to collapse.
The settlement amount was listed at $7.2 billion, a sum that has been accruing interest since 2002 and includes $688 million plus interest in attorneys fees.
The deal, approved late Monday by U.S. District Judge Melinda Harmon, and the attorneys fees were the largest in history in a U.S. securities-fraud case.
"We're pleased that the court recognizes the tremendous amount of work, skill and determination required to overcome significant obstacles in this complicated case," said Patrick Coughlin, attorney for the University of California Regents, the lead plaintiffs.
About 1.5 million people and entities will be eligible to share in the distribution under the settlement plan. The attorneys fees will go to San Diego-based Coughlin Stoia Geller Rudman & Robbins, the firm representing the university.
The distribution plan was part of a lawsuit filed by shareholders and investors, who claimed that Bank of America, J.P. Morgan Chase, Citigroup and others participated in the accounting fraud that led to Enron's downfall.
Enron, once the nation's seventh-largest company, filed for bankruptcy protection in December 2001 after it could no longer hide billions of dollars in debt or make failing ventures appear profitable.
At its height, Enron's common stock sold for as much as $90 per share before plummeting to as low as $1 just before the company went under.
To be eligible for the settlement, investors and shareholders needed to have bought Enron or Enron-related securities from Sept. 9, 1997, to Dec. 2, 2001.
Attorneys for several investors objected to the distribution plan and the attorneys fees.
"This court reiterates that there is no way to allocate these proceeds that would not in some way favor or disfavor to some degree some of the class members," Harmon wrote in her order. "On the whole, the court finds that . . . the chosen method is fair, adequate and reasonable."
Harmon also said the attorneys fees, which are 9.5 percent of the settlement, are "fair and reasonable."
Several financial institutions have not settled and remain as defendants in the Enron case, including Merrill Lynch, Credit Suisse and Barclays Bank. Several former Enron officers also remain as defendants, including former chief executive Jeffrey K. Skilling, now serving a criminal sentence of more than 24 years in federal prison in Minnesota.