UC amends Enron fraud lawsuit

17 April 2002 | The University of California, the lead plaintiff in an Enron shareholders lawsuit, has filed an amended lawsuit against the Houston-based energy giant, naming nine additional financial institutions, two law firms and other new individual defendants in the securities fraud case.

Fraud perpetrated by the energy company and its auditors succeeded because of the active complicity of several prominent banks and law firms, according to the new allegations presented April 8 in federal court.

The 485-page amended complaint lays out the scheme in detail naming key players in fraudulent transactions that cost shareholders more than $25 billion. A number of top bank executives profited personally from the schemes, according to the document.

“These prestigious banks and law firms used their skills and their professional reputation to help Enron executives shore up the company’s stock price and create a false appearance of financial strength and profitability, which fooled the public into investing billions of dollars,” said James Holst, UC general counsel.

“In return,” he said, “these firms received multimillion-dollar fees, and some of their top executives exploited the situation to cash in personally.”

The amended complaint documents a total of almost $1.2 billion in insider trading by 28 Enron directors and officers, approximately $171 million more than previously disclosed.

The losses of the plaintiffs in the shareholders’ class action — which now includes 39 companies and individuals who purchased Enron equity and debt securities between Oct. 19, 1998, and Nov. 29, 2001 — are estimated at more than $25 billion.

For UC, the aggregate total loss across its portfolios was $145 million, representing approximately 0.3 percent of the university’s total investment funds. The market value of the UC portfolios was $54 billion as of Nov. 30, 2001.

The complaint and related materials are available online at and.