Seven years after joining in a class action lawsuit against Enron, the University of California will finally receive its chunk of the $7 billion settlement from the now bankrupt energy firm.
As the lead plaintiff in the fraud suit, the UC is now charged with the task of distributing the rewarded settlement money. However, due to the sheer volume of claims brought against Enron, returns will be allocated to class members in several stages.
Last month the UC officially began carving out an initial $5 billion in settlement funds recovered from the fraudulent firm. The UC will receive $22 million during this phase of distribution.
UC Spokesperson Trey Davis said thousands of victims suffered investment losses resulting from the purchase and sale of Enron and Enron-related stock and will receive settlement money as a result.
“UC was one of the 200,000 investors who filed approved claims,” Davis said. “UC’s share will be returned to its pension and endowment funds from which the Enron losses occurred.”
According to the UC Office of the President, the Enron settlement marks the largest settlement in the history of class action security lawsuits.
“We are extremely pleased to be returning these funds to the members of the class,” Charles Robinson, the UC’s General Counsel, said in a press release. “Getting here has required a long, challenging effort, but the results for Enron investors are unprecedented.”
The UC first joined in the federal class action suit against Enron in Dec. of 2001. The plaintiffs alleged that Enron lured investors into purchasing securities with false financial statements that inaccurately inflated the price of the firm’s securities.
As a result of the misleading statements, the plaintiffs claimed Enron was able to trade the company’s artificially high stock while dumping their own shares, ultimately engaging in $1.1 billion in insider trading.
In response the plaintiffs joined in a massive class action lawsuit against accountants, lawyers, senior executives and financial institutions associated with the fraudulent firm.
While the plaintiffs have successfully recovered over $7.2 billion from most of the major players responsible for orchestrating the Enron fraud, several claims are still pending. Remaining defendants include Barclays Bank, Credit Suisse First Boston and Merrill Lynch, as well as three former Enron officers.