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How Enron awards do, or don't, trickle down

Settlements of $4.2 billion were biggest so far - but that doesn't mean shareholders are making up their losses.

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True, $4.2 billion is a lot of money - just shy of the gross domestic product of Barbados. But to Enron shareholders, it might as well be confetti.

As often happens in class-action lawsuits, the amount of money they have begun to receive in damages comes nowhere near the amount they lost.

So last week's news that two banks had reached substantial settlements in the Enron securities fraud class-action lawsuit did not leave former employees celebrating in the streets.

"We didn't win anything," says Debbie Perrotta, a former senior administrative assistant at Enron who had $40,000 squirreled away in a 401(k) retirement plan based mostly on company stock. "I'll be lucky if I get a couple hundred dollars."

Citigroup and JPMorgan Chase agreed to pay shareholders $2 billion and $2.2 billion respectively to exit a lawsuit that claims they helped Enron defraud its shareholders out of tens of billions of dollars.

These are the largest settlements in the Enron case so far, with a total of $4.7 billion recovered from six entities. Experts believe the numbers will soon surpass the record $6.1 billion recovered in the WorldCom bankruptcy.

Both financial institutions deny any wrongdoing, adding that they agreed to the settlements "solely to eliminate the uncertainties, burden and expense of further protracted litigation," according to a Citigroup statement.

Whether that is true or not, say experts, it seems likely that the remaining eight financial institutions named in the class-action lawsuit are considering settling as well - especially now that the focus has shifted to them.


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