Seven years after joining the federal class-action lawsuit against Enron Corporation in December 2001, the University of California will now begin distributing settlement funds of approximately $7 billion to nearly 200,000 investors, both individual and institutional.
The suit marks the largest ever settlement of securities in class-action lawsuits with the university serving as lead plaintiff in the case, appointed by the United States District Court in February 2002.
As lead plaintiff, the university was responsible for managing and overseeing the litigation process and working with other investors in pursuing the case. The law firm Coughlin Stoia Geller Rudman and Robbins LLP represented the university.
‘We’re proud of our role in securing the largest recovery ever obtained for investors victimized by corporate fraud,’ chief trial counsel Patrick J. Coughlin said in a statement. ‘The distribution of these funds is what it’s all about, getting billions of dollars back in the hands of defrauded investors.’
The lawsuit alleged that between Oct. 19, 1998, and Nov. 27, 2001, investors who purchased Enron securities were defrauded by way of false financial statements that deceitfully inflated the’ price of Enron stock. It was during this period that the defendants ‘mdash; among them Enron’s accountants, bankers, senior executives and lawyers ‘mdash; were able to carry out illegal insider trading of up to $1.1 billion.
The case was tried in the U.S. District Court for the southern district of Texas in Houston. A settlement allocation plan was approved in September 2008 and the distribution process will take place in stages over the next several months.
The university announced Dec. 13 that it had begun distributing $5 billion of the $7 billion awarded to claimants, with reimbursement amounts varying depending on the type of securities purchased and at what time the investment was made. During this initial distribution period, the university will receive $22 million, 20 percent of its allowed loss of $109.4 million under the allocation plan.
‘We are extremely pleased to be returning these funds to the members of the class,’ UC general counsel Charles Robinson said in a statement. ‘Getting here has required a long and challenging effort, but the results for Enron investors are unprecedented.’
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