The Bank of America has agreed to pay $69 million as part of an agreement to settle a class action lawsuit brought on behalf of purchasers of Enron securities and led by the Regents of the University of California. The lawsuit is pending in the United States District Court for the Southern District of Texas.

“We are very pleased with this settlement which, given the limited potential liability of the Bank of America, represents a substantial recovery and sets a benchmark for the ratio between potential liability and recovery for the other financial institution defendants,” said James E. Holst, the university’s general counsel.

The bank said it believes that it is in its best interests to resolve the claims and put the litigation behind it. Under the settlement, the bank denied that it violated any law and explained that it settled the matter solely to eliminate the uncertainties, expense and distraction of further protracted litigation.

Bank of America was sued for its role as an underwriter for certain Enron and Enron-related debt offerings. Under the 1933 Securities Act, Bank of America’s potential liability was limited to the loss of value of the securities it sold in the offerings it underwrote. The class consisted of all persons who purchased securities issued by Enron from Oct. 19, 1998 to Nov. 27, 2001. The settlement is subject to court approval.

“Bank of America’s payment represents more than 50% of its potential damage exposure for the debt offerings sued for in this case,” said William S. Lerach, of Lerach Coughlin Stoia and Robbins LLP, lead counsel for the university in the litigation. “We anticipate this settlement will be the precursor of much larger ones in the future, especially with the banks that face liability for participating in the scheme to defraud Enron’s common stockholders.”

The agreement marks the second settlement in the case. In July 2002, the University, as lead plaintiff, reached a $40 million settlement with Arthur Andersen’s international umbrella organization in the Enron fraud lawsuits that released Andersen Worldwide SC and its non-U.S. member firms from liability and dismissed them from the suit. Arthur Andersen’s U.S. arm, which served as Enron’s auditor prior to its bankruptcy, remains a defendant in the case.

In addition to Bank of America, defendants in the shareholders’ lawsuit include the financial institutions of J. P. Morgan Chase, Citigroup, Merrill Lynch, Credit Suisse First Boston, Canadian Imperial Bank of Commerce, Barclays Bank, Deutsche Bank, Toronto-Dominion Bank and the Royal Bank of Scotland, all of which the plaintiffs allege were players in a series of fraudulent transactions that ultimately cost Enron investors billions of dollars.

“These banks set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated the phony sale of phantom Enron assets,” the university said in a statement. “As a result, Enron executives were able to deceive investors by moving billions of dollars of debt off their balance sheets and artificially inflating stock values. Unlike Bank of America, these banks are potentially liable for the Enron investors’ entire loss.”

In February 2002, the University of California was named lead plaintiff in the Enron shareholders’ class action suit previously filed against 29 top executives of Enron Corp. and its accounting firm, Arthur Andersen LLP. The university filed a consolidated complaint on April 8, 2002, adding the nine banks and two law firms as defendants in the case. Depositions in the case began in June 2004, with the trial slated to begin Oct. 16, 2006.

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