U. of California Plans to Appeal Decision Against Enron Investors to U.S. Supreme Court
Chronicle of Higher Education 3/21/07
The university is the lead plaintiff in the class-action lawsuit filed by former investors in the now-bankrupt energy company. Settlements in the case so far have totaled $7.3-billion, to be shared by 50,000 investors.
Monday's unanimous opinion, by a three-judge panel of the U.S. Court of Appeals for the Fifth Circuit, sitting in New Orleans, will not affect the previous settlements with financial, accounting, and other firms that had been named as defendants. Those firms include Arthur Andersen LLP, the Canadian Imperial Bank of Commerce, Citigroup, and JPMorgan Chase.
The ruling came a few weeks before a trial for the banks that have opted not to settle -- including Merrill Lynch, Barclays, and Credit Suisse -- was set to begin in federal court in Houston before Judge Melinda Harmon. In total, the shareholders are seeking $40-billion in losses from several former Enron executives and the Wall Street firms that did business with Enron.
According to the opinion issued on Monday, the banks "only aided and abetted [Enron's] fraud by engaging in transactions to make it more plausible; they owed no duty to Enron's shareholders."
"We respectfully disagree," said Trey Davis, director of special projects at the University of California. "On behalf of the victims of one of the largest frauds in history, we believe the law is broad enough to include parties who intentionally engage in deceptive conduct for the purpose of misleading investors."
Mr. Davis said that the university will "seek expeditious review by the Supreme Court."