A flurry of big settlements in the Enron Corp. securities fraud class action was reported this summer by the UC Office of the President. Agreements totaling $6.6 billion were reached with financial institutions Citigroup ($2 billion), JPMorganChase ($2.2 billion) and, most recently, Canadian Imperial Bank of Commerce ($2.4 billion).

With previous Enron-related settlements, the grand total so far is $7.1 billion.

Remaining defendants in the investors’ lawsuit include the financial institutions of Merrill Lynch, Credit Suisse First Boston, Barclays Bank, Deutsche Bank, Toronto-Dominion Bank, Royal Bank of Canada, and the Royal Bank of Scotland, all alleged to be key players in a series of fraudulent transactions that ultimately cost Enron investors an estimated $40 billion to $45 billion in market losses.

These banks allegedly set up false investments in clandestinely controlled Enron partnerships, used offshore companies to disguise loans and facilitated phony sales of phantom Enron assets. As a result, Enron executives were able to deceive investors by reporting increased cash flow from operations and by moving billions of dollars of debt off Enron’s balance sheet, artificially inflating securities’ prices.

Additional remaining defendants include Goldman Sachs, because of its role as an underwriter of Enron securities, as well as former officers of Enron, its accountants, and certain law firms.

In February 2002, UC 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. Nine other institutional investors are acting as representative plaintiffs on behalf of Enron investors.

Recovered funds, to be split among investors who bought Enron shares or publicly traded debt securities issued by Enron and Enron-related entities between Sept. 9, 1997 and the firm’s December 2001 bankruptcy filing, are earning interest.

At this point, the total amount of money that will be recovered and the total pool of investor shares to receive it are unknown.

For more background on the Enron lawsuit, go online to <www.universityofcalifornia.edu/news/enron>.