UC Announces Plan to Distribute Recovered Funds to Defrauded Enron Investors

From University of California Office of the President

July 27, 2007

The University of California, the lead plaintiff in the class action lawsuit against the Enron executives, accountants, attorneys and financial institutions that orchestrated the Enron fraud, today (July 27) announced a proposed allocation plan to distribute the largest settlement amount ever recovered in a securities class action.

UC has obtained more than $7.2 billion from several defendants in settlements on behalf of Enron investors. After adjustments for accrued interest, court-approved fees and expenses, the net settlement amount will be distributed to eligible investors who submit valid claims.

UC is now seeking public input on the proposed "plan of allocation" to calculate the claims of Enron class members and distribute the recovered funds to eligible investors who purchased Enron securities between September 9, 1997, and December 2, 2001. It is estimated that about 1.5 million Enron stock and bond purchasers comprise the class, whose losses from the fraud total more than $40 billion.

A copy of the complete plan is available online at www.enronfraud.com/allocationplan.html. Public comments about the plan may be submitted no later than Monday, August 20, by mail or online at www.enronfraud.com/allocationplan.html.

After reviewing the public's comments, the University will request permission from Judge Melinda Harmon of the U.S. District Court for the Southern District of Texas, Houston Division, to mail a notice to the Enron class members to seek their formal input about the proposed plan. The actual distribution of funds will be made after Judge Harmon approves the plan of allocation, after any appeals from that ruling are resolved, and after the claims administrator has received and reviewed the supporting data from class members about their claims. It is difficult to predict when all of those events will occur, but the likely earliest date is late 2008.

As the allocation plan process moves forward, there are also still several remaining defendants in the Enron case, including Barclays Bank, Credit Suisse First Boston and Merrill Lynch, as well as several former Enron officers, including CEO Jeff Skilling and Chief Accounting Officer Richard Causey. Also, the cases against Royal Bank of Canada, Royal Bank of Scotland and Toronto Dominion Bank have not been set for trial and are stayed pending the appeal of the split decision by a three-judge panel of the Fifth Circuit Court of Appeals that reversed the District Court's class certification order. A successful appeal will allow the plaintiffs to continue their efforts to collect additional recoveries from these remaining defendants.

"While we will continue to make every effort to ensure that all of the defendants are held accountable for their fraudulent actions, we also want to make sure that victimized investors receive their settlements as expeditiously and fairly as possible," said Charles Robinson, the University's general counsel.

To date, the settlements for Enron investors include $2.4 billion from Canadian Imperial Bank of Commerce, $2.2 billion from JPMorganChase, $2 billion from Citigroup, $222.5 million from Lehman Brothers, $69 million from Bank of America, $168 million from Enron's outside directors, $72.5 million from the accounting firm of Arthur Andersen LLP, $33 million from Andersen Worldwide, and $13.5 million from the law firm of Kirkland & Ellis LLP. UC has also secured a distribution of $51 million for investors through the bankruptcy proceeding for the LJM2 partnership involved in the Enron scheme.

These prior settlements - those set for distribution in the allocation plan - are unaffected by the Fifth Circuit's ruling.

UC has appealed the Fifth Circuit's decision to the U.S. Supreme Court, which will hear a related case (Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., Case No. 06-43) this fall that will likely determine if the case against the remaining Enron defendants will proceed.

UC filed a friend of the court brief supporting the plaintiffs in the Stoneridge case, as did a majority of state Attorneys General and a bipartisan group of former chairmen and commissioners of the Securities and Exchange Commission. A majority of the current SEC board, including Chairman Christopher Cox, also voted in favor of filing a brief on behalf of the plaintiffs.

In February 2002, UC was named lead plaintiff in the Enron shareholders' class action suit initially filed against top executives of Enron Corp. and its accounting firm, Arthur Andersen LLP. The university filed a consolidated complaint in April 2002 and an amended complaint in May 2003, which added nine banks and two law firms as defendants. The lead plaintiff and the class of Enron investors are represented by the law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP.

In calculating the net settlement amount available for allocation, the lead counsel may request a fee award of up to 10 percent of the settlement after deduction of costs and expenses. Any fee request will be subject to court approval. Previous expense reimbursements granted by the court to date total about $36 million. The $7.2 billion already recovered for investors is earning approximately $500,000 in interest every day, having already increased the net settlement available for eligible class members by several hundred million dollars.

UC's proportional share of recovered investments, net of internal litigation costs, will be returned to its pension and endowment funds, and would not be available for adjustments to University operations such as student fees, employee salaries, research facilities or other budgetary expenditures.

Allocation plan and public comment form:
www.enronfraud.com/allocationplan.html

For more background on the Enron lawsuit:
www.universityofcalifornia.edu/news/enron

Q&A for Enron investors:
www.enronfraud.com/enr-cgi-bin/mil?templ=qa.html

For investors who have questions about the Enron class and distribution:
(800) 449-4900

For reporters - more information about the allocation plan:
Dan Newman, Lerach Coughlin, (619) 231-1058