Citigroup Drops $2 Billion For UC Enron Investors
Citigroup was sued by a group of investors led by the University of California over its role in the fall of Enron. Citigroup agreed to pay $2 billion to settle.
Several other banks were accused along with Citgroup of having roles in the huge accounting scandal at Enron that ultimately led to the company’s stock collapsing.
Citigroup is no stranger to paying large sums of money to settle lawsuits. A while back, the company agreed to pay $2.58 billion to investors in relation to a scandal involving WorldCom.
“It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us,” stated Citigroup CEO Charles Prince. “By doing so, we will be better positioned to realize our goals. We acknowledge and appreciate the determined and professional efforts of the Regents of the University of California and its advisors in working with us to achieve a settlement that meets the goals of all parties.” Citigroup denies that it broke any laws. Fred Barbash of the Washington Post writes,
The case is one of an unprecedented blizzard of claims and charges stemming from the Enron collapse in 2001. Former Enron executives Jeffrey K. Skilling and Kenneth L. Lay are awaiting criminal trials on fraud and conspiracy charges.
The Arthur Andersen accounting firm all but went out of business after it was convicted of complicity in the Enron case, a conviction reversed this month by the U.S. Supreme Court because of flawed jury instructions.
“We are very pleased with the size of the settlement,” said William Lerach, the lawyer representing University of California investors. “It’s particularly significant in that several large, similarly situated banks remain as defendants in the case, so this is a step down the road, not the last step on the road.”
J.P. Morgan Chase, Merrill Lynch, Credit Suisse First Boston and Goldman Sachs are among the banks that have yet to settle with the investors. This settlement may pressure them to consider doing so.