UC selected to head Enron suit

LOS ANGELES - University of California took the helm of solving a national business debacle Friday when it was named lead plaintiff of the class-action lawsuit against senior executives of Enron Corp. and its auditor, accounting firm Arthur Andersen LLP. \n"We look forward to working closely with all of the plaintiffs to vigorously pursue this litigation with the shared goal of securing substantial recovery for all shareholders," UC General Counsel James Holst said in a statement. \nA conference is scheduled for Monday for Judge Melinda Harmon of the Southern District of Texas to review the case with the plaintiff and counsel. The parties then will determine the schedule for proceeding with the rest of the case. \nThe university has retained the San Diego-based firm Milberg Weiss Bershad Hynes & Lerach LLP as its counsel for the suit. The case will be litigated under the direction of the UC Board of Regents, according to university spokesman Trey Davis. \nThe UC lost $145 million after selling off its stock in November while Enron headed toward bankruptcy. \nEnron executives allegedly released false financial statements to inflate stock prices, and senior members cashed nearly $1.1 billion in stock before the company met financial doom. \nHarmon selected the UC based on its "ability as a single investor to coordinate the litigation and various plaintiffs' patterns of stock transactions," according to Friday's statement released by the university. \nSince the bankruptcy, hundreds of investors have filed suit against Enron and Arthur Andersen. The number of plaintiffs in the class action suit is open-ended at this point, Davis said. \n"The UC is in the process of forming a consolidated amended complaint that will pull all of it together," Davis said. \nUniversity officials said the litigation could take years to complete. \nAmong the hardest hit by the stock fall were the Florida State Pension Fund ($325 million), Georgia State Prison Fund ($127 million), Ohio Public Employees and Teachers ($114.5 million) and the New York City pension plan ($110 million). \nThe university was in a better position to lead the suit than the Florida fund because the latter already had been involved in several similar lawsuits, UC attorney Christopher Patti said. Federal law prohibits an entity from being a "professional plaintiff" by limiting the number of times a group can head a class action lawsuit. \nThe UC's loss of $145 million -- based on 2.2 million Enron shares -- accounted for only 0.3 percent of its diversified portfolio, which is worth about $54 billion. \n"The loss will have no impact upon the retirement benefits provided to UC retirees," UC Treasurer David Russ said in a statement. "Nonetheless, the university feels a strong obligation to recover monies that rightfully belong to the university, its employees and the other class members"