Merrill, Barclays Cut From Enron Shareholder Suit

Merrill, Barclays Cut From Enron Shareholder Suit - 3/6/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Merrill, Barclays Cut From Enron Shareholder Suit
Erin Marie Daly

Securities Law 360. March 6, 2009
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EXCERPT: A federal judge has thrown out all claims against Merrill Lynch & Co. Inc., Barclays PLC and Credit Suisse First Boston LLC in a long-running $40 billion securities class action launched by shareholders in the wake of Enron Corp.'s colossal collapse. Judge Melinda Harmon of the U.S. District Court for the Southern District of Texas gave the nod Thursday to summary judgment motions by the three financial institutions seeking to dismiss them from the lawsuit on the grounds that they could not be held liable for the fraud that felled the energy company. The banks filed their motions in light of the U.S. Supreme Court's 2008 decision in the Stoneridge v. Scientific Atlanta case, in which the justices ruled that third parties could not be held liable if their acts contributed to another party's fraud but never directly reached investors. In the Enron litigation, lawyers for the plaintiffs — a class led by the University of California Board of Regents — had argued that though Stoneridge and Enron appeared legally similar, there were enough differences of fact between them that the Enron case could be allowed to continue. After the Supreme Court heard Stoneridge, it declined in January 2008 to hear the Enron case, which centers on many of the same principles. The denial allowed to stand a March 2007 decision by the U.S. Court of Appeals for the Fifth Circuit, which ruled that the banks could not be held liable for the consequences of their actions because they did not knowingly make any false statements. The Fifth Circuit's decision threw out a class certification order issued by a lower court in the shareholder suit, and held that the only presumption potentially available in the case was fraud-on-the market.

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