UC announces settlement in third Enron case

The University of California has reached a $225.5 million settlement with investment banking company Lehman Brothers for its role in underwriting millions of dollars of Enron Corp. securities.

A class action lawsuit by investors — in which the university served as the lead plaintiff — charged the company of violating securities laws that make underwriters liable for misstatements in official documents of corporations whose debt they back.

The settlement is third in a string of UC suits dealing with the now-bankrupt energy giant, in which the university had invested. In July, UC officials announced a $69 million settlement with Bank of America in a similar suit. In addition, a year earlier, the university reached a $40 million settlement with the international umbrella organization of accounting firm Arthur Andersen, which served as Enron’s auditor.

The university is also participating in lawsuits against banking giants J.P. Morgan Chase, Citigroup, Merrill Lynch, Deutsche Bank and others on similar grounds.

“These banks set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated the phone sale of phantom Enron assets,” the university stated in written documents.

Researcher: Investments influenced research funds

Philip Morris threatened leading medical schools with the loss of research funding, offering grants as incentive to keep institutions from selling their investments in the tobacco conglomerate’s stock, a new report from a UC San Francisco researcher has charged.

The findings, published in the November issue of the journal Academic Medicine, are based on secret internal tobacco industry documents acquired through litigation, according to Ruth Malone, the report’s author and associate professor at UC San Francisco’s School of Nursing.

The company used its investments in academic research to pressure major universities to refrain from divesting their stock holdings, Malone stated in the report.

In addition, the industry used its support for research as a way “to buy legitimacy” and “to counter the image of harm caused by cigarettes,” according to Malone and research associate Nathaniel Wander.

In the 1980s, health and social welfare organizations like the American Medical Association withdrew their tobacco holdings and urged medical schools and parent universities to do the same.

The University of California divested its holdings in 2001 and recent votes by faculty at some UC campuses adopted rules against acceptance of tobacco industry research funding, according to Malone.

As of August, at least five of the 12 top-ranked medical schools in the country maintained their financial investments in the industry, Malone stated.

Company launches new P2P software aimed at students

Mill Valley-based company Grouper has launched new peer-to-peer software, targeted at college students, that it argues allows groups to lawfully share music.

Its programs allow groups of up to 30 to stream media files on personal computers, the company stated. Unlike other P2P software, the company has said that its internal player is lawful because it allows users to listen to files stored on friends’ computers without actually copying them, replicating physical “lending” of music stored on tangible media.

Grouper believes that the software can be used by students as “a practical tool” to form virtual study groups, allow professors to digitally distribute classroom materials and save university network administrators money by decreasing Internet bandwidth costs, because the program transfers files between machines on local networks, the company stated.

Other P2P providers have come under legal pressure from the Recording Industry Association of America, which has launched lawsuits against individuals accused of violating copyright laws by illegally sharing music. The group has also served subpoenas to universities, including UCLA, demanding identities of students using its network to download illegal music.

Environmental grades mixed on report card

Though scientists have made “dramatic improvements” in measuring exposure to a range of unhealthy air pollutants, Southern California scores “poorly” in its attempts to reduce traffic congestion, an annual study by UCLA’s Institute of the Environment has found.

In the report, UCLA’s urban planning experts argued that regional planners in Los Angeles should focus on improving bus service to reduce congestion, instead of building roads and rail transit lines or encouraging use of carpool lanes. In addition, the report cited evidence of “an onslaught of illegal dumping and unauthorized landfill operations” on the region’s Native American reservations.