Print this article | Return to Article | Return to CFO.com
Agreement is the largest related to the bankruptcy of the former energy giant.
Stephen Taub, CFO.com | US
June 10, 2005
Citigroup has agreed to pay $2 billion to settle a shareholder lawsuit stemming from its role in the Enron Corp. accounting scandal.
The settlement is the largest related to Enron's bankruptcy, according to Bloomberg. Indeed, it is one of the largest in corporate history, though Reuters noted that in 2004, Citigroup agreed to pay $2.58 billion to investors in WorldCom Inc.
The world's largest bank said it has already fully reserved for the settlement and it does not plan to adjust its remaining reserves. Citigroup also stressed that it denies committing any violation of law and has agreed to the settlement solely to eliminate the uncertainties, burden, and expense of further protracted litigation.
"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," said chief executive officer Charles Prince, in a statement. "By doing so, we will be better positioned to realize our goals."
The settlement covers all purchasers of all publicly traded equity and debt securities issued by Enron and Enron-related entities between September 9, 1997, and December 2, 2001. It still must be approved by the Board of Regents of the University of California, the lead plaintiff in the case; Citigroup's board of directors; and the U.S. District Court for the Southern District of Texas. The settlement amount includes plaintiffs' attorneys' fees, which will be determined by the court at a later date.
In an e-mailed statement cited by Bloomberg, plaintiffs' lead attorney William Lerach wrote that shareholders "continue to pursue other defendants, including other banks that have been charged with knowingly participating in the scheme to defraud Enron investors."
Last July, Bank of America Corp. became the first bank to settle class-action litigation related to Enron's collapse when it agreed to pay $69 million, reported The Wall Street Journal.
Other banks that were sued include J.P. Morgan Chase & Co.; Merrill Lynch & Co.; Credit Suisse First Boston, a unit of Credit Suisse Group; Deutsche Bank AG; Canadian Imperial Bank of Commerce; Barclays PLC; Toronto-Dominion Bank; and Royal Bank of Scotland PLC., according to the paper.