University of California named lead plaintiff in Dynegy securities suit

The United States District Court Monday (Oct. 28) named the University of California as lead plaintiff in the Dynegy securities fraud class action lawsuit.

"The University of California will shoulder its responsibility as lead plaintiff with the deepest sense of obligation to the UC family of employees, retirees and students and to the millions of shareholders who placed their trust in Dynegy,” said James E. Holst, the university's general counsel. “We look forward to working closely with all of the plaintiffs to vigorously pursue this litigation with the shared goal of securing substantial recovery for all shareholders."

Judge Sim Lake of the U.S. District Court for the Southern District of Texas in Houston based his 27-page ruling on a combination of factors, including the amount of losses that UC sustained as a result of its Dynegy investments, the characterization of its claims as “typical” of those of other class members, and its ability to litigate the case on behalf of the shareholders.

The University of California's Dynegy losses totaled $112.4 million, based on 4.16 million shares purchased between Nov. 1, 2000, and May 7, 2002. The current value of UC's diversified portfolio, which includes both pension and endowment funds, stands at approximately $51 billion.

"Our Dynegy losses, while substantial, represented less than one-quarter of one percent of total funds under management," said David H. Russ, the university's treasurer. "As a result, the loss will have no impact upon the retirement benefits provided to UC retirees and the endowment’s support of the university's academic and research mission. Nonetheless, the university feels a strong obligation to recover assets that rightfully belong to the university, its employees and the other class members."

The University of California filed its motion to be named lead plaintiff on June 25, 2002. The lead plaintiff in such cases helps manage and monitor the litigation process on behalf of others who bought the securities.

To litigate the case and work with other shareholders, the university has retained on contingency Milberg Weiss Bershad Hynes & Lerach LLP, one of the country’s largest and most experienced class action law firms, as its counsel for the suit. In his ruling, Judge Lake concurred that the firm “is fully capable of representing the lead plaintiff and the class.”
The other shareholders who sought lead-plaintiff status included the New York Hotel Trades Council and Hotel Association of New York City pension funds, Banknorth Investment Management Group, RRZ Investments Management, Tennant Group, Daniel Rascoe, Brian Lindquist, and Michael Kvetnoy.

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