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FOR IMMEDIATE RELEASE
Friday, December 21, 2001
Trey Davis (510) 987-0056
trey.davis@ucop.edu
UNIVERSITY OF CALIFORNIA JOINS FEDERAL CLASS ACTION SUIT
AGAINST
SENIOR ENRON MANAGEMENT AND ARTHUR ANDERSON LLP
The University of California today (Dec. 21) joined a federal class-action lawsuit against 29 senior executives of the Enron Corp. and the international accounting firm of Arthur Andersen LLP.
The suit is pending in the U.S. District Court for the Southern District of Texas in Houston. It alleges that investors who purchased Enron securities between Oct. 19, 1998, and Nov. 27, 2001, were the victims of a fraudulent scheme whereby the defendants disseminated false financial statements that artificially inflated the price of Enron securities and allowed the defendants to engage in $1.1 billion of illegal insider trading.
Among the Enron senior executives named in the suit are Jeffrey K. Skilling, former president and chief executive officer, and Kenneth L. Lay, former chief executive officer and chairman of the board of directors.
The complaint alleges that during the period specified, "defendants engaged in massive insider trading while issuing false financial statements and making false and misleading statements about the company's purportedly 'record' results and strong operating performance. As a result of these false statements, the company's stock traded as high as $90.75, allowing defendants to dump 17.3 million of their own Enron shares for proceeds of $1.1 billion."
Among other things, the suit asks for "disgorgement" (refund) of defendants' $1.1 billion or more of insider-trading proceeds as well as compensatory damages.
The aggregate total loss across all University of California portfolios is $145 million, representing approximately three-tenths of one percent (0.30 percent) of the university's total investment funds. The current market value of the UC portfolios was $54 billion as of Nov. 30, 2001.
"Even with the demise of Enron occurring in November, the UCRP (University of California Retirement Plan) equity portfolio recorded a return of 7.70 percent, which was within 0.08 percent of its performance benchmark," said David H. Russ, treasurer to the University of California Board of Regents.
"The alleged financial fraud losses from the retirement plan's Enron position in no way affects the ability of the retirement plan, which is in a strong overfunded position, to meet its obligations to the beneficiaries," Russ added.
UC has petitioned the court to be named as a lead plaintiff in the lawsuit, which would allow the university to participate in the management and oversight of the litigation on behalf of itself and all other members of the class.
UC is also seeking to have its counsel, Milberg Weiss Bershad Hynes & Lerach LLP, appointed as counsel for the class.
Milberg Weiss is the nation's largest law firm whose practice is focused on class action litigation and specializes in representing institutional investors damaged by corporate malfeasance, securities fraud and insider trading.
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