After nearly seven years of legal wrangling, the UC Board of Regents has reached a settlement of $72 million with the Arthur Andersen Accounting L.L.P. in the Enron securities litigation, though the settlement is subject to the approval of the court.

The Andersen settlement becomes effective only if the university mediates with certain other defendants prior to the end of the trial, according to a UC Office of the President press release.

Before the Enron case, Andersen was one of the leading accounting firms in the United States, performing various financial services for large corporations.

The University of California is one of a number of large public and private institutions that invested in Enron based on inaccurate compnay statements and information certified by Andersen LLP, according to a university press release.

In 2002, the Andersen LLP surrendered its license to practice nationally, pending prosecution results by the U.S. Department of Education over its auditing practices with Enron.

Corporate leaders in of the Enron scandal had produced numerous fraudulent financial records about the company’s health, masking the financial predicament of the business.

Before its bankruptcy, Enron had more than 21,000 employees and was one of the world’s leading energy and communications companies, with reported profits of $101 billion in 2000 alone.

Nationally, Enron had been named “America’s Most Innovative Company” for six straight years by Fortune, America’s longest-running business magazine. Enron became infamous by the end of 2001, when it was revealed that the company’s so-called revenue was all a result of creatively planned accounting fraud.

Enron schemers had set up false investments through partnerships within sister corporations, using offshore companies to mask loans and further the imaginary sale of Enron assets. In doing so, Enron executives were able to defraud investors by reporting profit and removing debt from Enron’s balance sheet, consequently inflating security prices.

In December 2001, shortly after Enron declared bankruptcy, the case against Andersen began, initiated by former Enron investors.

As auditors of Enron, Andersen had signed off on many of the false reports that allowed Enron to defraud its investors.

For its role in the scandal, former Enron investors, including the University of California, served Andersen a class action lawsuit.

In the beginning of 2002, the University of California was named lead plaintiff in the case against Andersen and various banks dealing with Enron.

On April 8, 2002, the university furthered its complaint, adding more associates of Enron as defendants in the case, including nine banks and two law firms. On Sept. 21, the regents approved the deal with Andersen.

The recent agreement has been enthusiastically received by the university.

“The settlement is a positive outcome given Arthur Andersen’s financial situation,” UCOP spokesman Trey Davis said. “It continues the pattern of substantial recoveries against the defendants responsible for the Enron scheme, which defrauded tens of thousands of investors across the country.”

The settlement is pending approval by U.S. District Court Judge Melinda Harmon, though the university does not expect a rejection, based on the suit’s history.

“We don’t anticipate that happening,” Davis said. “The judge has approved all the settlements to date that she has ruled upon.”

If the settlement is approved, the University of California will have won more than $7.3 billion for its clients, including more than $6 billion from banks dealing with Enron, such as Citigroup and JPMorganChase. The settlement will be in addition to money already paid to the university by Andersen.

Trial in the case is slated to begin in Houston on April 9 of next year, according to a university press release.