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Citigroup Blinks

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The prospect of facing more litigation in Texas has led the company to pay $2 billion to Enron investors to settle claims.

Citigroup hasn’t even admitted it did anything wrong. But the desire to be rid of ongoing litigation from shareholders related to the Enron stock drop seems greater than Citigroup’s desire to prove it didn’t do anything wrong.

This is the third class action settlement related to securities that hit $2 billion USD or more. Citigroup paid $2.6 billion to settle a suit filed by Worldcom shareholders after that company’s stock plunged in the wake of an accounting scandal.

Cendant agreed to pay investors $2.9 billion in the Worldcom case as a settlement.

But Enron investors shouldn’t make any short-term plans for the money yet. First, the boards of Citigroup and the University of California, the lead investor, must approve the settlement. Then the federal judge in Texas overseeing the case must approve it as well.

Shareholders who held Enron stock between 1997 and 2001 and are eligible to participate in the settlement will have to be identified, and file claims. It may take eighteen months before anyone receives a check.

A number of other institutions involved in the Enron case may now feel pressured to settle. JP Morgan Chase, Barclays PLC, and several others involved in the Enron debacle will have to decide if settling is worth the cost of moving on as a business.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.

Citigroup Blinks
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