University of California named lead plaintiff in Enron class action suit
The United States District Court today (Feb.15) named the University of California as lead plaintiff in the shareholders' class action lawsuit against senior executives of the Enron Corporation and the accounting firm of Arthur Andersen LLP.
"The University of California is honored to be selected as lead plaintiff. We take up this responsibility with the deepest sense of obligation not only to the UC family of employees, retirees and students, but to the millions of Americans who invested in good faith with Enron. 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," said James E. Holst, the university's general counsel.
Judge Melinda Harmon of the United States District Court for the Southern District of Texas in Houston based her ruling on a combination of financial and legal factors, including the amount of losses that a plaintiff sustained as a result of its Enron investments, statutory qualifications for filing securities class action suits, UC's ability as a single investor to coordinate the litigation, and various plaintiffs' patterns of Enron stock transactions.
"This lawsuit is a rare and extraordinary legal step for the university, but it is warranted by the extreme and unique circumstances surrounding Enron's collapse and the damage that collapse has caused so many," said Holst.
of California joined the class action suit on Dec. 21,
2001. The other shareholders who sought lead-plaintiff
status included the group of Florida and the City of
New York and a four-state group comprised of Ohio, Washington,
Georgia and Alabama.
The University of California's Enron losses totaled $144.9 million, based on 2.2 million Enron shares purchased during the class period. The current value of UC's diversified portfolio, which includes both pension and endowment funds, stands at approximately $54 billion.
"Our Enron losses, while substantial, represented only 0.3 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 monies that rightfully belong to the university, its employees and the other class members."
institutions experiencing significant Enron losses include:
Florida state pension fund, $325 million; Georgia state
pension fund, $127 million; Ohio public employees and
teachers, $114.5 million; Washington state employees,
$103 million; New York City pension fund, $110 million;
CalSTRS, $49 million; and CalPERS, $40 million.
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