Enron Board and UC Reach $168 Million Settlement

A $168 million proposed settlement among the University of California, other large investors, and several of Enron?s outside directors over alleged securities violations was sent to the federal district court in Houston this week. The deal, set for preliminary approval on February 4, would bring an end to part of the suit arising from the energy crisis?in which UC is the lead plaintiff?that charges 17 Enron directors with strict liability for violating the 1933 Securities Act. The fraud portion of the class-action suit under the Securities Act continues and is set for trial in October 2006. The suit the UC Regents filed last November against several natural gas traders for allegedly illegally driving up gas prices during the crisis is separate and moving ahead in Alameda County Superior Court ( Circuit , Nov. 5, 2003). Under the settlement before the Southern District Court of Texas, $155 million would come from insurance proceeds and more than $13 million from personal contributions from 10 of the directors for insider trading, according to UC spokesperson Trey Davis. The University lost $145 million from its Enron investments. It won?t know how much it will recover under this deal until all the settlements and trial results are completed, according to Davis. Other plaintiffs in the suit include the San Francisco City and County Employees? Retirement System, the Washington State Investment Board, and other pension funds. ?The settlement is very significant in holding these outside directors at least partially responsible,? stated William Lerach of Lerach Coughlin Stoia, lead counsel for the class. ?Hopefully this will help send a message to corporate boardrooms of the importance of directors performing their legal duties,? Lerach said. The board directors affected include Wendy Gramm, wife of former senator Phil Gramm (R-Texas), and Ken Harrison, chief executive officer of Portland General Electric. The settlement does not include fraud allegations against former Enron chief executive officer Ken Lay or former Enron executives Jeff Skilling and Andrew Fastow. The pending deal, which also involves Arthur Anderson, two law firms, and 10 banks, is the fourth settlement in the case. Last October, UC reached a $222.5 million settlement with Lehman Brothers. It reached settlements of $69 million with Bank of America in July and $40 million with Arthur Andersen in 2002.

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Enron Board and UC Reach $168 Million Settlement

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