University of California, Oakland, today announced a $2 billion settlement with Citigroup Inc. in the Enron Corp. securities litigation case. The "size of this settlement is unprecedented for a stock fraud case," said J. Lawrence Irving, a retired federal judge who is advising the UC regents, in a news release. The university is lead plaintiff the class-action suit, filed in U.S. District Court in Houston, that claimed Enron investors lost $40 billion to $45 billion and alleged that Citigroup participated in an "elaborate scheme" to defraud investors, the news release said. University pension and endowment funds, with a combined $63 billion in assets, lost $144.7 million from Enron stock holdings between September 1997 and December 2001, said Trey Davis, UC spokesman. The recent settlement "augurs well for us in dealing with the remaining defendants in the case," he said.
Remaining defendants in the investors' lawsuit are: JPMorgan Chase, Merrill Lynch, Credit Suisse First Boston, Canadian Imperial Bank of Commerce, Barclays Bank, Deutsche Bank, Toronto-Dominion Bank, Royal Bank of Canada and the Royal Bank of Scotland, as well as Goldman Sachs for its role as an underwriter of Enron securities.
The settlement is subject to approval by the university board of regents, the Citigroup board of directors and the court. In prior settlements, the university obtained $491.5 million for Enron investors from Lehman Brothers, Bank of America, Andersen Worldwide, Enron's outside directors and Ken Harrison, Enron's former vice chairman.
Other plaintiffs in the suit include the $61.3 billion Washington State Investment Board, Olympia; the $10.6 billion Illinois State Board of Investment, Chicago; and the $12.8 billion San Francisco City & County Employees' Retirement System.
"It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us," said Charles Prince, Citigroup CEO, in a news release. "By doing so, we will be better positioned to realize our goals."