Many of you have probably read about
Citigroup's settlement of the Enron class action, under which it will pay 2 billion dollars. I want to take this opportunity to briefly explain the four different legal tracks involved in Enron right now, so you can understand what has settled, what has not, and what's still out there.
Before I begin--a disclaimer--I am an attorney and my firm is involved in defending one of the banks being sued in a couple of these actions. I am not betraying client confidences, etc., and will avoid letting that color things--this is just the facts as much as possible.
We'll start on the flip.
Track 1--The Shareholder Derivative Suit--Newby v. Enron.
In this civil case (pending in Houston), the class of shareholders of Enron sued, well, just about everyone involved, from the individual directors and officers of Enron, to Enron's law firms, to Enron's accountants. The basis for this lawsuit is (basically) that the people and entities sued effectuated Enron's fraudulent transactions, causing Enron's stock price to be artificially inflated. The complaint spells out the case (it's 600 pages, so I've obviously simplified. The lead law firm representing the shareholders as a class has a solid website, which provides most of the legal documents filed by the shareholders. Pretty much all of the defendants moved to dismiss, claiming that their conduct was not sufficiently culpable to subject them to liability under current shareholder derivative law.
While a few defendants (Enron's secondary law firm, some banks) were succesful in getting the complaint dismissed, most were not, including pretty much all of the individual defendants (including Ken Lay, etc.) and the big banks (Citi and Chase first among them.) The decision is here (300+ plus pages). The defendants generally believe this decision is in error, overextending the federal securities law/shareholder deriviative rights. In the event this goes to trial or somehow results in a verdict for plaintiffs (which I believe to be unlikely--I think most, if not all, defendants are likely to settle), defendants can and will appeal, and have a decent chance of success.
A number of the defendants (most prominently, Andersen, Bank of America and, now, Citigroup) have settled, paying out money into the class pool. The class pool will be divided between members of the class and their lawyers in a manner to be determined at the end of the litigation. Proceeds from this litigation go to the "innocent" shareholders who did not opt out of the class and their lawyers.
Track 2--The "Adversary"--Enron v. the Banks
At the same time, Enron's bankruptcy continues. Many of the defendants in Newby have also made claims in the bankruptcy, alleging they are owed money by Enron (particularly the banks). Within the context of the bankruptcy, Enron has sued these entities. The claim is basically that because of their misconduct with "old Enron," these entities' claims should be eliminated, reduced, or subordinated, meaning that they are only paid after all creditors are paid. This is a more dangerous suit for the banks in particular than is Newby and Citigroup has not settled this action. While the banks have created a "reserve" for litigation/settlement costs stemming out of Newby, they (I believe) still show much of their Enron debt, which remains unpaid, as due and owing, or an account receivable, on their balance sheet (this is in accordance with proper accounting). If Enron is successful in this proceeding, the banks will not get paid on the debt, or will only get paid after other creditors are satisfied. The winner, if the adversary is succesful? "Innocent" creditors of Enron's, but not shareholders, unless the claims are wholly expunged--creditors get paid before equity holders in the bankruptcy process.
Track 3--The SEC Investigations
As you probably know, the SEC performed a number of investigations of Enron's banks and accounting firms. Most of these have now closed after those banks and accounting firms paid a civil penalty to the SEC. That money goes to the government.
Track 4--Criminal Actions
The federal government has brought a number of criminal actions against people at Enron, including Lay, Skilling, Fastow, etc. Most of these are still in their early stages. A few people (most prominently, the Fastows) have agreed to turn state's evidence and plead guilty in exchange for leniency. This is where individuals go to jail and pay fines for criminal conduct--that money all goes to the government.
Obviously, Enron is complex and understanding it is not, by any means, an easy thing, but remember that:
A) Law and "justice" are not necessarily the same. A person or entity can behave in a way that's less than ideal and still not be subjected to legal liability.
B) There are multiple tracks involved in this--just because part of the litigation comes to an end does not mean the whole case is at an end.