Supreme Court Declines to Hear Appeal from Former Enron Investors
By Aaron Poehler
Published on January 22, 2008
The case's denial comes as little surprise to most in the wake of last week's ruling by the court in the case of Stoneridge Investment Partners v. Scientific-Atlanta, which stated that third-party consultants such as banks and accounting firms cannot be held liable in corporate fraud cases unless investors relied directly on their advice. The Enron case had been on hold pending the resolution of the Stoneridge case. Justice Anthony Kennedy, who authored the Stoneridge decision, recused himself from the Enron appeal for unspecified reasons.
The court's ruling means the end of the securities fraud class-action suit, which sought to recoup as much as $40 billion in funds lost in the Enron bankruptcy from investment banks including Merrill Lynch & Co., Credit Suisse Group, and Barclays PLC.
Other banks including Citigroup, Bank of America, JPMorgan Chase, Lehman Brothers, and CIBC have previously settled with Enron plaintiffs, collectively paying out a total of nearly $7.3 billion.
Attorneys for Enron investors say they will attempt to resuscitate the lawsuit by establishing a trail of evidence tying the Wall Street firms more directly to the corporation's dramatic accounting fraud collapse in 2001.
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