Last week, the Houston Chronicle had a feature article discussing the status of the Enron securities litigation.
Quote of note: “Assuming all the existing settlements get court approval, there already is more than $7.8 billion — that’s billion with a b — gaining interest in the name of disappointed Enron shareholders and ex-employees. Lawyers inside the class-action cases, where most of the cash is accumulating, think it’s possible that in a year or two there will be $10 billion or more ready to be doled out.”
Canadian Imperial Bank of Commmerce (“CIBC”) (TSX: CM, NYSE: BCM) has agreed to a preliminary settlement of the claims brought against it as part of the Enron securities class action pending in the S.D. of Texas. The suit alleges that CIBC helped Enron inflate its revenues by hiding debt.
Bloomberg reports that the settlement is for $2.4 billion, which is more than the Enron-related settlements entered into by JPMorgan Chase or Citigroup and equivalent to 22% of CIBC’s book value. The settlements in the Enron case have reached a total of approximately $7 billion.
The dominos are beginning to fall. On the heels of Citibank’s settlement, JPMorgan Chase & Co.(NYSE: JPM) has announced a preliminary settlement of the claims brought against it as part of the Enron securities class action pending in the S.D. of Texas. The settlement is for $2.2 billion, bringing the total settlements in the case to $4.7 billion and counting. The Washington Post has this article.
In another early settlement, Citigroup, Inc. (NYSE: C) has announced a preliminary settlement of the claims brought against it as part of the Enron securities class action pending in the S.D. of Texas. The settlement is for $2 billion and will be covered by the company’s existing litigation reserves. Bloomberg has this report.
More on the Dura decision:
(1) The Legal Times has an article (via law.com – free regist. req’d) discussing the reaction of the parties to the decision.
(2) Forbes has a column stating that the decision was a “no-brainer” and providing some academic commentary.
(3) The Wall Street Journal has an editorial (subscrip. req’d) citing the decision as another reason why criminal sentencing in the Enron “barge” case should not be based on the alleged inflation of the company’s stock price.
Eighteen former Enron directors have entered into a preliminary settlement of the securities class action claims against them for $168 million. As in the similar WorldCom settlement, Bloomberg reports that a portion of the funds ($13 million) will be paid by ten of the directors personally. The amount of the personal payments is apparently “tied to allegations of insider trading.”
Quote of note: “In addition to the $168 million settlement amount, the directors agreed to pay $32 million to Enron creditors, the investors said. That money will also be paid out of the insurance policies, which total $200 million of coverage. Another $13 million of insurance proceeds will be reserved for the legal fees of directors who didn’t settle, including former Enron Chairman Kenneth Lay and ex-Chief Executive Jeffrey Skilling.”
According to a feature article (free regist. req’d) in the Atlanta Journal-Constitution, the legal bills related to Enron’s bankruptcy are close to $1 billion.
Quote of note: “When Enron Corp. emerges from bankruptcy by year’s end, there won’t be much wealth left for those who invested in the once high-flying company. By most estimates, Enron’s creditors will likely receive 20 cents on the dollar, while shareholders probably won’t get a cent. But don’t worry about the lawyers, accountants and other advisers who’ve feasted on Enron’s Chapter 11 case. Their court-approved fees are expected to reach $995 million.”