On March 6, 2007, Judge Lynn N. Hughes for the Southern District of Texas fully and finally approved an agreement to settle the El Paso securities fraud litigation for a total cash settlement of $285 million. In so approving, Judge Hughes commented that "while he did not want to give [Jonathan Plasse] a big head" he observed that the class had been excellently represented throughout the years of litigation by Mr. Plasse. The court went on to commend the efficiency with which the case had been prosecuted particularly in light of the complexity of the allegations and the legal issues. The settlement resolves claims brought on behalf of purchasers of El Paso securities between February 22, 2000 and February 17, 2004 (class period). Labaton Sucharow served as court-appointed co-lead counsel in the case and Partner Jonathan Plasse represented the class and lead plaintiff.
The action alleged, among other things, that the defendants inflated the prices of El Paso securities by making materially false and misleading SEC filings and public statements which: (1) exaggerated gross revenues due to phony round trip trading; (2) inflated revenues and earnings by misuse of market to market accounting; (3) hid more than $1 billion of liabilities associated with off balance sheet companies controlled by El Paso; (4) falsely attributed El Paso's success to legitimate business practices when, in fact, El Paso manipulated the California energy market; and (5) overstated El Paso's proved oil and natural gas reserves by more than 40 percent, thereby causing a material overstatement of its income. This conduct alledgedly inflated El Paso earnings by hundreds of millions of dollars during the class period.