UC to Collect $2.4 Billion in Fraud Suit

The University of California and other former Enron investors' settlement pot grew by $2.4 billion in an agreement announced August 2. The latest settlement involving Enron now has the fund at $7 billion following a deal reached with the Canadian Imperial Bank of Commerce. The settlement is part of a wide-reaching class-action suit filed in February 2002 that alleges that the Canadian bank, other banks, and investment firms violated the Securities and Exchange Act of 1934 and other securities laws through their involvement in fraudulent investments in Enron partnerships, where loans were hidden and bogus sales transacted. "This settlement demonstrates that the university's strategy of aggressively pursuing the defendants is working," stated Bill Lerach, the University of California's counsel. The university is the lead plaintiff, representing investors who allegedly lost tens of billions of dollars in Enron deals. The settlement does not include admission of wrongdoing by the Canadian bank, which agreed to pay $2.4 billion to bring the litigation to an end. "A key priority for us is to resolve this case and substantially reduce our litigation risk," stated Gerry McCaughey, Canadian Imperial Bank?s president and chief executive officer. The bank said the settlement payout will cause its capital ratio to drop to 7.5 percent. The bank?s preferred floor is 8.5 percent. In June, the University of California reaped a combined $4 billion from settlements with JP Morgan and Citigroup (Circuit, June 17, 2005). The settlement must be approved by the UC Regents and the federal district court in Houston, Texas. A trial is scheduled for October 2006. Remaining defendants include Merrill Lynch, Credit Suisse First Boston, Barclays Bank, Deutsche Bank, and the Royal Banks of Canada and Scotland. Enron Securities Class-Action Settlements Canadian Imperial Bank of Commerce $2.4 billion, Aug. 2005 JP Morgan Chase $2.2 billion, June 2005 Citigroup $2 billion, June 2005 Enron outside directors $168 million, Jan. 2005 Lehman Brothers $222.5 million, Oct. 2004 Bank of America $69 million, July 2004 Anderson Worldwide $32 million, 2002 LJM2 bankruptcy recovery $32 million, 2004-05 Total $7.12 billion Source: University of California.

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UC to Collect $2.4 Billion in Fraud Suit

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