Shareholders get $7.2 billion from Enron settlement; lawyers $688 million

Enron's 1.5 million eligible  individual shareholders and entities like pension funds will collectively receive $7.2 billion in settlements from financial institutions accused of participating in the fraud, under a federal court approved distribution plan. Of this their lawyers will get a whopping $688 million in legal fees, plus interest, the largest ever legal fees for a securities fraud case in the US.

The settlement amount has been accruing interest since 2002 and includes the lawyers' fees.

Shareholders and investors had filed a $40-billion lawsuit against Bank of America, JPMorgan Chase & Co., Citigroup, Canadian Imperial Bank of Commerce and others for colluding with Enron in accounting frauds that led to the company's downfall.

Texas Attorney General Greg Abbott, has vehemently opposed to the $688 million being awarded to lawyers of San Diego-based Coughlin Stoia Geller Rudman & Robbins LLP, instead of the money going to the hardworking men and women who suffered from Enron's demise.

Judge Harmon ruled that the lawyer's rate of 9.5 per cent was far lower than in comparable class actions and the lawyers had logged in 280,000 hours preparing for the trial by organizing millions of documents and examining more than 400 witnesses.

Once the seventh-largest US Fortune 500 company, Enron went bankrupt in December 2001 after hiding billions in debt with accounting tricks and making loss-making ventures appear profitable, with banks playing a major role in the fraud by funding the company's dubious deals.