In the largest settlement for Enron Corp. shareholders to date, Citigroup agreed to pay $2 billion to settle a class action lawsuit that had accused Citigroup and other investment firms of helping Enron continue to raise money even as it was imploding.
Under the terms of the settlement announced on Friday, Citigroup will make a pre-tax payment to the settlement class, which consists of all purchasers of all publicly traded equity and debt securities issued by Enron and Enron-related entities between Sept. 9, 1997 and Dec. 2, 2001. The settlement is fully covered by Citigroup's existing litigation reserves, the company said.
"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 Citigroup CEO Charles Prince. "By doing so, we will be better positioned to realize our goals. We acknowledge and appreciate the determined and professional efforts of the Regents of the University of California and its advisers in working with us to achieve a settlement that meets the goals of all parties."
The class action settlement must be approved by the board of regents of the University of California, the lead plaintiff in the case, and Citigroup's board. It is also subject to the approval of the U.S. District Court for the Southern District of Texas, Houston Division, where it is currently pending. The lawsuit was set to go to trial in late 2006 or early 2007.
The settlement amount includes plaintiffs' attorneys' fees, which will be determined by the court at a later date. In announcing the settlement, Citigroup denied committing any violation of law and said it had agreed to settle "solely to eliminate the uncertainties, burden and expense of further protracted litigation.''
Citigroup's payment is the largest settlement so far in the case, more than four times the total of $491.5 million already received from settlements with Lehman Brothers, Bank of America, Andersen Worldwide, Enron's outside directors and Ken Harrison, Enron's former vice chairman.
In response to the settlement agreement, the University of California's James E. Holst, general counsel, said, "This agreement is a tremendous recovery for Enron investors and continues a pattern of highly favorable settlements. Citigroup has acted very responsibly in stepping up to the plate in this manner."
Holst added that the university "will continue to work to achieve large recoveries from the remaining defendants, either through settlement or at trial.''
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.