In an order dated November 30, 2006, Judge Melinda Harmon concluded that, although plaintiffs in the Enron Securities Case had sufficient grounds to name Alliance Capital as a defendant initially, the plaintiffs nevertheless should have recognized that evidence collected through discovery did not justify pursuing the case against Alliance and that the plaintiffs should have dismissed Alliance, rather than oppose its motion for summary judgment. Judge Harmon’s order dismissed the case against Alliance and ordered that Alliance be reimbursed its costs and legal fees for having to file the motion. As a part of the order, Judge Harmon expressed her opinion that it would be more appropriate that the fee award should be borne by counsel, and Lead Counsel, the firm of Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, has agreed that it would pay them.

As Lead Plaintiff, the University of California has taken its obligations, both to the class it represents and to the integrity of the judicial process, very seriously. Following the specific directions of the Regents, the University established a rigorous procedure with its Office of General Counsel and with special outside counsel for reviewing the available evidence to determine whether defendants should be added to or dismissed from the lawsuit. As a result of that process, the University has voluntarily dismissed a number of defendants when it concluded that the evidence did not justify further pursuing claims against them. Special outside counsel, however, was not involved in the decision to proceed against Alliance.

Although the Office of General Counsel of the University, with Lead Counsel, made a good faith determination that sufficient evidence existed of Alliance’s potential liability to submit the matter to the Court for resolution, the University regrets that it continued to pursue litigation against Alliance Capital under these circumstances. Accordingly, the University has agreed that it will not appeal the dismissal of Alliance in exchange for Alliance’s agreement to waive the award of attorney’s fees.

While both favorable and adverse rulings are to be expected in this significant and complex case, the University, with the assistance of the Lerach Coughlin firm and with outside counsel, will continue to evaluate the evidentiary basis of the class’s claims against the defendants to ensure that a substantial, good faith basis exists to pursue them.

Alliance Stipulation, Dec. 20, 2006

Court ruling on Alliance Capital, Nov. 30, 2006