How do you divide $7.8 billion among 1.5 million people who hold claims to the cache? That’s the dilemma facing U.S. District Judge Melinda Harmon, who must decide how to distribute the sum recouped for shareholders of Enron that were part of a class-action lawsuit.
Lawyers for the lead plaintiffs asked a judge to give preliminary approval of their plan to distribute the funds, according to the Associated Press. However, attorneys representing other shareholders, who are also part of the ongoing litigation, opposed the plan, asserting that it does not allocate the money fairly and dismisses some legitimate claims, according to the report.
Harmon, for her part, wants more time before she makes a decision. “Just let me stew about this a little bit,” she reportedly said. The $7.8 billion recovered is part of a $40 billion lawsuit filed by the regents of the University of California, against major financial institutions — including Bank of America, JPMorgan, Chase & Co., Citigroup and Canadian Imperial Bank of Commerce — alleging that they participated in Enron’s accounting fraud that led to the bankruptcy of the one-time energy giant.
The lead plaintiffs have filed in Houston federal court their final plan for distributing the money, according to AP. The investors had published a draft of the allocation plan in July. Most of the money will be distributed to shareholders who lost money on securities issued by Enron while a small portion will go to those who got securities from Enron-related entities, noted the wire service.
Figuring out how much each claimant gets is no easy task. According to the report, the formula considers factors such as when a security was bought or sold, the purchase price paid, and the type of stock that was bought. To be eligible for the settlement, investors must have bought Enron or Enron-related securities between September 9, 1997 and December 2, 2001.
Patrick Coughlin, chief trial counsel at Coughlin Stoia Geller Rudman & Robbins, which represents the lead plaintiffs, called the plan “fair and reasonable,” according to the AP. But, he conceded that some plaintiffs may not be happy with their share.
An attorney representing a subclass of investors who have won between $60 million and $80 million from financial firms from claims they made related to violations of U.S. securities laws, argues that all of the money should not be placed in one pot, note AP. “It’s our money,” Robert Finkel, an attorney representing the subclass, told the wire service. “There should be no commingling of money.”