West Palm Beach (HedgeCo.Net) – Long after the collapse of Enron in 2001, Citgroup has agreed to pay $1.66 billion to creditors of the Houston based company.
The settlement, which was reached right before the case was set to go to trial, will resolve claims against Citi brought on by the Enron bankruptcy estate and holders of credit-linked notes tied to the bank. Citi has also agreed to give up some of their claims in the Enron bankruptcy proceedings.
“We are pleased to have reached a successful resolution of the two largest outstanding matters dating from the Enron disputes,” Shannon Bell, a spokeswoman for Citigroup said.
Though this settlement will help to close the Enron debacle, Citigroup’s troubles are far from over. The bank is expected to writedown another $13 billion for the first quarter, on top of the $20 billion they have already lost. They also still have to settle smaller claims dealing with the underwriting of securities linked to subprime mortgages.
Citi, along with other big names in the banking industry like JPMorgan Chase, came under scrutiny for making large amounts of cash from Enron by advising them on deals and underwriting their securities.
Denying any wrongdoing, Citi was then forced to pay $2 billion to settle a class-action lawsuit, in what was the largest payment ever from that type of case. This was also coupled with the $2.6 billion that they shelled out to settle claims arising from the WorldCom bankruptcy.
It is estimated that Citi has another $1.5 billion in claims they are fighting from banks and other creditors that are accusing them of being deceitful of Enron’s finances.
Yesterday, Citigroup’s shares fell roughly 6 per cent to $22.05.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com
