Orange County Reaches Settlement
Jun. 08, 1999
SANTA ANA, Calif. (AP) _ Orange County has reached a $20.8 million settlement with 12 finance and securities firms connected to the largest municipal bankruptcy in U.S. history, officials announced today.
The settlement is subject to approval by the U.S. Bankruptcy Court and would bring the total amount recovered by the county to $860.58 million. The cases stem from the infamous $1.64 billion collapse of Orange County's investment pool in 1994.
The out-of-court settlement brings to a close most of the numerous lawsuits the county filed in the case. Settlements were reached previously with 15 other firms, whose brokers and dealers were accused of contributing to the county's downturn.
Merrill Lynch agreed last year to pay the county $437.1 million to settle a lawsuit accusing the firm of giving bad advice that contributed to the financial collapse.
A lawsuit against the Standard & Poor's rating service has not been settled and is headed for trial soon in Los Angeles. The settlements announced Monday will have no bearing on the case, said Leah Johnson, director of communications for the bond rating service.
All proceeds from the lawsuit settlements will be applied to the county's remaining debt, said Gary Burton, the county's chief financial officer.
``We're happy to have this behind us because we're working on financial planning and in putting good management practices in place,'' Burton said. ``This allows us to focus on that, rather than bankruptcy issues.''
The county would receive only 38 percent of the settlements, which must be shared with other participants in the failed investment pool, Burton said.
The companies that agreed to settle with the county include: Bank of America Securities; Citibank and Citicorp Securities; Fuji Securities; Lehman Brothers; PaineWebber; Prudential Securities; Smith Barney; Cantor Fitzgerald Securities Corp.; Daiwa Securities America Inc.; Donaldson Lufkin & Jenrette Securities Corp.; Kidder, Peabody & Co.; Sanwa Securities USA.