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The state pension fund recovered most of its losses from Enron Corp. when five investment banks paid $49 million to settle litigation over the collapse of the energy trading company. The settlement represented 86 percent of the $57 million lost by the pension fund on Enron stocks and bonds when the company collapsed in 2001, David Bronner, chief executive of the Retirement Systems of Alabama, said Tuesday. The settlement marks the second time in less than a year that investment bankers have paid money to the Retirement Systems of Alabama to settle litigation arising from a major bankruptcy. In September, three investment firms and Arthur Andersen paid the pension fund $111 million to settle claims over the WorldCom bankruptcy. That payment represented 89 percent of the pension fund’s losses. “It’s unbelievable,” Bronner said. In the Enron settlement, the five investment banks — Merrill Lynch & Co., Citigroup Inc., JP Morgan Chase & Co., Credit Suisse First Boston LLC and Bank of America Corp. — did not acknowledge any wrongdoing. Bank of America spokeswoman Shirley Norton said it was in the best interest of shareholders to settle and put the case behind the company. Spokesmen for the other companies either declined to comment or did not return phone calls. Bronner said he did not know how much each firm contributed to the settlement, and Norton said the parties were not disclosing that. Haskel Slaughter, the Alabama law firm that represented the Retirement Systems, will receive $6.7 million for its work on the case. In the suit, the pension fund said the five firms, which underwrote or sold Enron stocks and bonds, should have known Enron was in trouble and should not have encouraged the public employees’ pension fund to invest in the company. The settlement came Monday as attorneys for both sides prepared for a federal court hearing on the case Thursday in Houston. The hearing was on the Retirement Systems’ request to get the case moved back to state court in Montgomery, where it was first filed. Had the pension fund won, others suing the five companies could have raised the same argument, and the threat of that helped foster a settlement, Bronner said. The Retirement Systems still has litigation pending against three former Enron executives. Bronner said the pension fund can’t pursue those claims until the criminal cases against some of the company’s former leaders are completed. “That’s years away,” he said. The Retirement Systems’ losses on Enron represented a small portion of its $25 billion in assets. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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