A U.S. judge has given preliminary approval to a $6.7 billion civil settlement by three banks accused by Enron shareholders of helping the company hide financial misdeeds that led to its ruin, an attorney said on Wednesday.
Lead shareholder attorney William Lerach said the settlement approved by U.S. District Court Judge Melinda Harmon was the largest of its kind and that more would follow.
“It is the largest recovery for fraud in history and, believe me, we are not done. There’s more to come,” he said.
Wednesday’s agreement, which still must receive final approval from Harmon, included settlements of $2.4 billion from
Canadian Imperial Bank of Commerce, $2.2 billion from JP Morgan Chase and $2.0 billion from Citigroup.
The $6.7 billion amount includes interest accrued since those proposed settlements were first announced last year.
Lerach spoke to reporters outside the federal courthouse in downtown Houston where former Enron chief executives Ken Lay and Jeffrey Skilling are on trial on fraud and conspiracy charges for their part in the spectacular collapse of the energy trading giant.
Enron, once a high-flying company loved by Wall Street and lenders, declared bankruptcy in December 2001 amid disclosures it had used side deals to hide debt and inflate profits.
Numerous shareholder lawsuits were filed, with the University of California being named lead plaintiff to represent the defendants.
Including earlier settlements with firms such as Lehman Brothers and Bank of America, shareholders are now due to receive $7.2 billion of the $40 billion plaintiffs in the cases have claimed they lost in the Enron’s collapse.
Lerach said that payout amount will grow as more defendants settle, which he portrayed as inevitable.
“These banks participated in a scheme to defraud the Enron investors for their own financial gain. They got caught, the evidence is overwhelming,” he said.
“Those that haven’t settled are going to go to trial and be held liable, and that’s why they’re paying these huge amounts of money to settle,” he said.
Those banks include Merrill Lynch, Barclays Plc., Credit Suisse First Boston, Toronto Dominion Bank, Royal Bank of Canada and Royal Bank of Scotland.