Citigroup agrees to pay $2 billion to settle Enron class-action suit

NEW YORK (AP) _ Citigroup Inc., the nation's biggest financial institution, on Friday said it will pay $2 billion to settle a class-action lawsuit over its role in the sale of Enron Corp. stock and

Friday, June 10th 2005, 8:39 am

By: News On 6

NEW YORK (AP) _ Citigroup Inc., the nation's biggest financial institution, on Friday said it will pay $2 billion to settle a class-action lawsuit over its role in the sale of Enron Corp. stock and bonds before the energy company's collapse that cost investors billions of dollars.

Under the settlement, Citigroup said it will distribute the payment to investors who bought publicly traded equity and debt securities issued by Enron and its related units between Sept. 9, 1997, and Dec. 2, 2001 when Enron sought bankruptcy protection.

The suit had accused Citigroup and other investment firms of helping Enron continue to raise money even as the company was imploding.

In announcing the settlement, Citigroup denied committing any violation of law and said it had agreed to settle ``solely to eliminate the uncertainties, burden and expense of further protracted litigation.''

``It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us,'' Charles Prince, chief executive of Citigroup, said in a statement.

Enron went bankrupt in December 2001 when revelations of hidden debt, inflated profits and accounting trickery shattered its facade of success. Thousands of workers lost their jobs.

Enron founder Kenneth Lay and former CEO Jeffrey Skilling are facing fraud and conspiracy charges in the case and have each pleaded not guilty.

In its announcement on Friday, Citigroup said its existing litigation reserves are sufficient to cover the settlement, and that it does not plan to increase the remaining reserves, which are considered adequate for future exposure to pending Enron- and research-related claims.

The settlement is pending approval by Citigroup's directors and the board of regents at the University of California, which is the lead plaintiff in the case.