Declaration Of Helen J. Hodges In Support Of Lead Counsel's ...

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281. The Supreme Court has not yet ruled on the Petition, but heard oral argument in Stoneridge on October 9, 2007. XIV. DRAFTING THE PLAN OF ALLOCATION 282. After the settlements with Citigroup, JPMorgan Chase and CIBC were approved by the Court in 2006, we alerted our damages consultants at Stanford Consulting that we needed to start gathering the information necessary to formulate a plan of allocation which would govern how the amounts recovered would be distributed to eligible claimants. Meanwhile we were preparing for trial against the non-settling banks, which was then set for the fall of 2006. We had hoped that the case would be resolved globally so that the distribution of all funds recovered could be made at once. However, the trial was continued to April 2007 and the case was stayed when the Fifth Circuit, in essence, rejected our theory of liability against the banks. Shortly after the Fifth Circuit reversed class certification, we began to consider the process for generating a plan of allocation of the settlement proceeds which we had already obtained. <strong>In</strong>itially we conferred with Chris Patti, University Counsel for The Regents, and with consultants Robert Fairbank and Rock Hankin, who had been engaged by The Regents. Our goal was to create a plan of allocation that was fair to all settlement Class members. 283. Drafting the plan of allocation was complicated for a number of reasons. The banks who paid $6.6 billion (as well as other settling defendants) had insisted on getting a release for over 100 securities; those securities were listed in the stipulations of settlement with Citigroup, JPMorgan and CIBC and they are identified in the proposed notice to the Class regarding the plan of allocation. Most of the securities were issued by companies that were related to Enron, but many of the securities were not issued via registration statements. Despite the fact that we went to great lengths in our search, we and our consultants could not find any pricing data for some securities. Not only did we not have pricing data, we had no trade volume data for most of the securities. Without - 154 -
pricing or trade volume data, estimating damages is very problematic. We pressed our consultants to scour every available source for information about the long list of securities. Using the information that was gathered, our consultants estimated damages for as many securities as possible. 284. We also considered whether and how to increase the recovery for claimants with §11 claims. We recognized that the named plaintiffs and those they represented with §11 claims arguably should receive a higher percentage of loss as compared to those with only §10(b) claims. The reason for this is that a plaintiff need not prove reliance or scienter in order to prevail on a §11 claim, in contrast to a §10(b) claim. We also took into account that on the facts of this case, because the fraud was so pervasive and, in our view, the defendants knew very well they were falsifying Enron’s reported financial condition, scienter would not be exceptionally difficult to prove and thus the added “burden” of the §10(b) fraud claim was not that great. We also considered that plaintiffs had initially alleged that all defendants in Newby violated §10(b) and when certain banks settled, they insisted on receiving a release of both §11 and §10(b) claims. Given all these considerations, we concluded that it was appropriate to increase the §11 claimants’ percentage recovery as compared to §10(b) claimants’. We asked Stanford Consulting to estimate a “multiplier” for the §11 claims. We discussed various assumptions for those estimates. We reviewed numerous versions of these estimates using various assumptions. 285. After many discussions amongst ourselves and with Stanford Consulting, we had an overview of how to do the plan of allocation. Then we had to put our ideas on paper. Over the course of the summer of 2007 we reviewed countless drafts of the plan of allocation. We met with Chris Patti, Bob Fairbank, Rock Hankin and Stanford Consulting to discuss a draft in June. We also met several times with Stanford Consulting and Roman Weil, who has prepared a declaration supporting the plan of allocation. - 155 -
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UNITED STATES DISTRICT COURT SOUTHE
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2. The Parties Establish a Document
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I, HELEN J. HODGES, declare as foll
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• Reviewed over 70 million pages
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6. The above recoveries were based
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gathered and which the banks and En
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14. In this endeavor, Coughlin Stoi
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17. Lead Counsel prosecuted the lit
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[T]his representation has been unde
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and the necessary involvement with
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case. The Court hereby awards attor
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published an article, “Enron Jolt
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statements. We compiled profiles on
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34. We had no way of knowing whethe
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which witnesses to pursue, but cont
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the market in October 2001. The ana
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said it was unable to determine whe
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depositions because discovery was p
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65. After the motion was filed, The
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institutional plaintiffs, their rep
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drawing on the expertise of our in-
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83. On May 3, 2002, the Preferred P
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finance certain of the partnerships
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and participated in a scheme to def
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(j) Arthur Andersen LLP (Docket No.
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Lead Plaintiff had adequately alleg
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(a) The Court ruled that Lead Plain
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director of New Power, and issuance
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94. On September 26, 2002, Lead Pla
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mandamus review, and that the Court
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106. On May 6, 2003, defendant Citi
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scheme, and certain specific allega
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pled with the requisite particulari
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Merrill Lynch and Deutsche Bank Ent
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4. Motions to Intervene Additional
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Gramm, Jaedicke, LeMaistre, Meyer,
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professionals and experts, and atte
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121. On May 7, 2003, the Outside Di
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of Enron’s prominence and magnitu
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131. As part of discovery, Lead Cou
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Third Parties and Defendants Date S
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Third Parties and Defendants Date S
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133. Document requests and subpoena
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139. In responding to the document
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146. In addition to JPMorgan’s in
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10. Requests for Admission 152. In
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Protocol Order provided for the ord
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privilege. And the defendants agree
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Deponent Entity Date[s] Location No
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promptly responded to all discovery
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Page 115 and 116: 195. On April 13, 2004, defendants
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Page 121 and 122: 208. A two-day hearing was held reg
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Page 131 and 132: primarily involving Deutsche Bank,
Page 133 and 134: We filed a notice of request for se
Page 135 and 136: 236. Bankruptcy Examiner Batson him
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Page 143 and 144: team; for example, we reviewed info
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Page 147 and 148: Opposition to Deutsche Bank’s Mot
Page 149 and 150: Sec. Litig., 443 F.3d 987 (8th Cir.
Page 151 and 152: Plaintiff’s Opposition to Motion
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Page 155 and 156: the Pleadings (Docket No. 5019). On
Page 157: joint-and-several liability for kno
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Page 163: 296. Attached hereto as Ex. 2 is a
Page 166 and 167: ADDITIONAL SERVICE LIST Stuart Yoes
Page 168 and 169: ENRON COUGHLIN STOIA GELLER RUDMAN
Page 170 and 171: Name Title Hours Rate Lodestar Meye
Page 172 and 173: ENRON - SUMMARY OF PLAINTIFFS' FIRM
Page 178: EXHIBIT 4
Page 182 and 183: TOP SECURITIES SETTLEMENTS Case Nam
Page 184 and 185: Exhibit Listings and Notes regardin
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