Background on the Enron Case

On April 8, 2002, the University of California filed a consolidated amended complaint in the U.S. District Court for the Southern District of Texas, naming the financial institutions and law firms that were directly involved with Enron executives and their auditors in defrauding investors as defendants in the Enron class action suit. The amended complaint details the scheme by which the defendants defrauded thousands of institutions and individual investors of more than $40 billion.

In February 2002, UC was named lead plaintiff in the lawsuit previously filed against 29 top executives of Enron Corporation and its accounting firm, Arthur Andersen LLP.

UC is one of a number of large public and private institutions across the country that invested in Enron based on what is now known to be inaccurate official company statements, documents filed with regulatory agencies, and information audited and certified by Arthur Andersen. The lawsuit seeks to recover investment losses resulting from the University's purchase and sale of Enron stock between May 2000 and November 2001.

Because UC invests in a diverse range of stocks and bonds, its Enron losses represent less than 0.3% of the University's total portfolio. The Enron losses, while substantial, were more than offset by gains in other investments. In fact, as news of the energy company's financial dealings and fraudulent practices were exposed, UC's retirement portfolio grew by more than $1.9 billion from September 30 to November 30, 2001. As a result, the Enron losses have not affected UC retirement benefits.

Nonetheless, the University, together with other parties in the class action, will continue to vigorously pursue its case in court to ensure that defrauded investors receive a meaningful and substantial recovery of their losses.

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