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BANKRUPTCY Jury awards $120 million to insurer’s creditors Newark, N.J. (AP)-A New Jersey federal jury has awarded Vermont’s insurance commissioner $119.9 million to distribute to creditors of the Ambassador Insurance Co., which failed more than two decades ago. The defendants were accounting giant PricewaterhouseCoopers LLP, successor company to Coopers & Lybrand, which Vermont accused of negligent audits of Ambassador; and the estate of the late Arnold Chait, the Ambassador president accused by Vermont of mismanagement. In 1983, Vermont’s insurance commissioner at the time, George Chaffee, took control of Ambassador because it was insolvent. Vermont sued in 1985, charging that Ambassador’s financial statements concealed the company’s weakness from regulators. The company was liquidated in the late 1980s after Vermont courts upheld the receivership. Because Ambassador was a “surplus lines company,” writing high-risk policies, it lacked guaranty fund protection-a safety net for policyholders-in case of insolvency. As a result, the receiver has been evaluating claims from policyholders and claimants of the company. CLASS ACTION Reliant, Deloitte settle improper trading suits Houston (AP)-Reliant Energy Inc. and Big Four accounting firm Deloitte & Touche LLP have agreed to pay $75 million to settle 15 class actions alleging that the energy company’s shares plummeted in 2002 because of revelations about improper trading. Houston-based Reliant will pay $68 million and the accounting firm will pay $7 million. The allegations concerned so-called round-trip trades-or simultaneous energy swaps recorded as trades to inflate trading volume-from April 2001 through May 2002. Robust trading activity bolsters energy merchants’ appearance of financial health. The lawsuits alleged that Reliant lied about trading volumes in financial statements that were audited by Deloitte & Touche. FRAUD Defrauding U.S. claim costs Harvard $26.5M Boston (AP)-Harvard University has agreed to pay $26.5 million to settle a complaint about investments a professor and a former staff member made while working on a federal contract to help privatize Russia’s post-Soviet economy. The agreement also calls for economics Professor Andrei Shleifer and former project manager Jonathan Hay each to pay up to $2 million to settle claims that they used their influence over Russian officials to enrich themselves. Shleifer, who remains on Harvard’s faculty, and Hay were top officials at the law reform project of the now-defunct Harvard Institute for International Development. A federal judge had found that the men conspired to defraud the government by making personal investments while working on a federal contract. NATURAL RESOURCES Montana dam removal settlement to cost $100M Bonner, Mont. (AP)-Montana state, federal and tribal officials have announced plans for financing removal of a century-old dam and the toxic mud accumulated behind it. Atlantic Richfield Co. will cover about $80 million of the $100 million cost, with dam owner NorthWestern Corp. contributing $11.4 million and the state providing the rest. However, the state’s $7.6 million contribution comes from a $225 million settlement that Atlantic Richfield and Montana reached in 1998 for damage to natural resources. Atlantic Richfield became responsible for mining pollution in Montana when it acquired the assets and liabilities of the former Anaconda Co., a copper giant. Its pollution from mining operations in the Butte area washed down the Clark Fork River. SHAREHOLDER SUIT Canadian bank settles Enron claims for $2.4B New York (AP)-Canadian Imperial Bank of Commerce has agreed to pay $2.4 billion to resolve investors’ claims that it helped hide losses at Enron Corp., marking the biggest individual settlement since the energy trader collapsed in a massive accounting fraud in 2001. Combined with similar agreements with Citigroup Inc. and JPMorgan Chase & Co. and others, the settlements have now reached more than $7 billion. The financial institutions allegedly helped Enron set up partnerships that the company used to boost profits while moving billions of dollars of debt off its balance sheet. That allowed Enron to report higher cash flow from operations and lower debt, making its financial picture look better than it was and artificially inflating the company’s stock and bond prices, according to the lawsuit. The class action, Newby v. Enron Corp., is currently pending in the U.S. District Court for the Southern District of Texas in Houston. Time Warner sets aside $3 billion for settlements New York (AP)-Time Warner Inc. has set aside $3 billion in reserves to cover lawsuits from shareholders over its merger with AOL. The media giant also said it had reached an agreement with the largest group of shareholders for $2.4 billion. The shareholders claim they were cheated in the merger by inflated revenue claims and improper accounting at AOL. Time Warner also said it would buy back $5 billion of its shares over the next two years in an attempt to improve its stock price. The settlement deal must still be approved in court. The company also set aside another $600 million to settle other remaining shareholder litigation.

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