Enron investors set for final payout
Thursday 17 January 2008
In what looks likely to be the final chapter in a six-year legal saga, investors in the collapsed energy company Enron are learning this week that they will receive an average $6.79 per share in compensation.
Investors paid up to $90 (£46) a share for a stake in what was once one of the biggest and best-respected companies in the US, but which was revealed to be a financial house of cards kept upright by a string of complex accounting frauds.
Its bankruptcy in 2001 unleashed a slew of legal actions. A $7.2bn compensation fund has been amassed, thanks to class action lawsuits against the banks which did business with Enron, banks which shareholders allege were aiding and abetting a fraud.
The settlement is the largest ever in a securities fraud case.
About 1.5 million Enron investors who bought shares or bonds between 1997 and 2001 are involved in the lawsuit. This week they have been receiving letters laying out details of the compensation fund and notifying them of a 29 February court hearing that will settle its distribution and rule on whether the lawyers involved can take a 10 per cent cut.
Some plaintiffs still hope that the fund could be topped up further, since some banks have refused to pay into it. However, a Supreme Court ruling this week severely limited the scope for shareholder lawsuits against the business partners of fraudulent companies.
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