Citigroup pays $2bn in Enron case

[emad]

US banking giant Citigroup has agreed to pay $2bn (£1.1bn) to settle a lawsuit brought by shareholders of collapsed energy trading firm Enron.

The class-action suit accused Citigroup of assisting Enron to carry out the huge accounting fraud which bankrupted it in 2001.

Citigroup did not admit liability, and said money already set aside for legal costs would cover the payment.

Citigroup paid Worldcom investors $2.6bn to settle another suit in 2004.

http://news.bbc.co.uk/1/hi/business/4081132.stm

[rkc3]

1. Wow. $4.6bn in two settlements.

How many bankruptcies from middle America would it take to reach $4.6bn in losses?

You would think banking giants were cash-strapped the way they plead their case to Congress prior to the Bankruptcy Bill.

[Bob3]

2. I guess my per check charge is about to go up.

And I'll bet the CEO will still get millions. What the heck do you have to do to get fired when you're a CEO anyway?

[DemoTex]

3. Which investors? Enron employee 401k investors?

The investors who stand to gain from the deal are those who bought shares and debt issued by Enron between September 1997 and December 2001, the time at which the firm declared itself bankrupt.

The Enron employees participating in the company's 401k pension were required to invest in Enron stock and Enron stock only. They seem to fall into the definition from the article (above). I sure hope some little guys got a piece of that $2-billion.

http://groups.msn.com/_Secure/0QgAAAJIVE59CQah1t!N5vrta5c9v6cZ6bbDajakGOE!QCMlgr6SrsZikvVqBMEkPewP6G6lQps9Njgzwo8XKIbuOoYYM5y7WfWZ4spsrM1k/Ken-Lay-%26-Bushes.jpg

[BlueIris]

4. Damn. Check out the exchange rate, there, kids.

I've been paying attention, but it's down on my list of crises to be horrified about.

[AValdoux]

5. Frontline this week

Frontline featured the story about Citigroup & WorldComm. It explained how it was against the law for an investment bank to sell stocks. The companies had to be separate to prevent conflict of interest, pushing stocks that owed you a lot of money. Greenspan let a merger between Soloman Smith & Barney & Citigroup take place even though it was illegal. He gave Congress two years to change the law and they did. Soloman anaylists were pushing WorldComm stock to the public but telling insiders to dump the stock. I'm leaving out a lot of the details but it sounds like that is what happened to Enron also. They also made the point that the brokerage analysts are working for the companies not the investor. Investor beware.


AValdoux

[indepat]

6. And the Federal government is to guarantee huge loans to ex-Enroners: I

love it.

[Sivafae]

7. Glad they are not my bank!!! N/T

[swag]

9. They have several subsidiary companies.

Smith Barney, for example, often a crooked house in its own right.

[swag]

8. Capitalism: the Unknown Ideal!

The class-action suit accused Citigroup of assisting Enron to carry out the huge accounting fraud which bankrupted it in 2001.