The University of California, Oakland, today reached a $468 million settlement with Dynegy Inc. and some of its former executives and directors. The university, which has $62 billion in pension and endowment assets, will also obtain an additional $5 million from Citigroup, which served as banker to the energy firm. In March, the university reached a $1.05 million settlement with Arthur Andersen, Dynegy's former auditor. In addition, Dynegy agreed to name two plaintiff-nominated directors to the board to monitor the firm's corporate governance activities.
The settlements stem from a class-action lawsuit alleging that Dynegy mischaracterized the proceeds of a loan as operational revenues and manipulated its reported tax liability. When the financial maneuvers were exposed in April 2002, the price of the company's stock plunged. The University of California, lead plaintiff in the suit, had held 4.16 million shares of Dynegy stock. Several former Dynegy employees previously pleaded guilty or have been convicted of criminal fraud.