ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, July 24, 1996 TAG: 9607240045
SECTION: BUSINESS PAGE: B7 EDITION: METRO
DATELINE: NEW YORK
SOURCE: ASSOCIATED PRESS
A federal judge has given tentative approval to an agreement by PaineWebber Group Inc. to pay $125 million in cash to settle investors' claims it sold them risky limited partnerships over a 12-year period.
The deal could be worth a total of more than $200 million, including such costs as payments to investors in partnerships that show losses in the future, lawyers for the plaintiffs have estimated. PaineWebber also has agreed to waive investment fees in certain instances.
A PaineWebber spokeswoman said Tuesday that the cost of the deal already was accounted for by the company in money it set aside last year.
A lawyer for the investors said the deal, approved last week, will pay thousands of investors close to all the money they lost when their PaineWebber investments unexpectedly soured. PaineWebber sold the $2.5 billion in partnerships to investors between 1980 and 1992.
The approval by U.S. District Judge Sidney Stein in New York tentatively resolves the biggest remaining legal action against the brokerage stemming from the investments in real estate, oil and gas, aircraft and other types of businesses.
Under the agreement, PaineWebber would pay $125 million to investors in 57 of the partnerships. The remainder of the $200 million will cover future potential losses incurred by investors in other partnerships and other costs.
If the deal is given final approval in October, investors can get their money by the end of 1997.
``The objective is simple - to return every dollar of money invested by every investor. We think we are going to get close to that objective,'' said Nicholas Chimicles, a Haverford, Pa.-based lawyer leading the class action lawsuit.
The agreement is a cheaper resolution than the estimated $1.5 billion that Prudential Securities Inc. has had to pay to resolve charges of fraud in its sale of $8 billion in limited partnerships.
The settlement is part of a larger $305.5 million agreement with the Securities and Exchange Commission. That deal calls for PaineWebber to pay a total of $295.5 million to investors and $10 million to regulators.
The SEC charged PaineWebber with misleading investors by understating the high risks and the low returns of limited partnership investments to an estimated 200,000 people nationwide.
LENGTH: Medium: 51 linesby CNB