The Enron Corp. shareholders that are suing three big investment banks for their alleged roles in helping Enron hide its failing financial position have petitioned the U.S. Supreme Court to look at a ruling made by the U.S. Court of Appeals for the Fifth Circuit that reverses the certification of a single plaintiff case. The court had ruled on March 19 that while Enron had a duty to its shareholders, banks do not.
The appeals court concluded that the plaintiffs did not have a right to a presumption of reliance on the banks’ failure to reveal their alleged participation in the Enron controversy. It also ruled that the plaintiffs do not have a right to the presumption of reliance afforded by the “fraud-on-the-market” concept.
In their certiorari petition, filed by the University of California Regents on behalf of Enron shareholders, the plaintiffs say that the Supreme Court needs to review the case to resolve a “clear conflict” in the circuits and lower courts about the meaning of so-called “scheme liability.” They also said that the appeals court decision was not correct.
UC General Counsel Charles Robinson issued a statement saying that Enron shareholders were entitled to present their case at trial and that the plaintiffs believed the law was broad enough to include parties that engaged in deceptive conduct to purposely mislead investors.
Plaintiffs’ counsel William Lerach said that investment banks should be held accountable and that the fifth court’s ruling give other corporations permission to “commit fraud without consequences,” leaving investors without recourse.
Investors represented by the UC Regents include the Washington State Investment Board and the San Francisco City and County Retirement System. Defendants in the petition include Credit Suisse First Boston LLC, Pershing LLC, Merrill Lynch Pierce Fenner & Smith Inc., Credit Suisse First Boston (USA) Inc., Merrill Lynch & Co., Barclays Capital Inc., Barclays Bank PLC, and Barclays PLC.
Because of the Enron scandal, the university pension fund lost over $144 million. It oversees $71.5 billion in assets.
Shepherd Smith and Edwards represents investors who have lost money because of the inappropriate conduct and actions of members of the securities industry. If you are one of those investors, please contact Shepherd Smith and Edwards today for your free consultation.
University urges Enron class-action be reinstated, Pensions and Investments, April 5, 2007
Related Web Resources:
Enron on Trial, CNN.com