Tuesday, March 20, 2007
The Fifth Circuit has thrown out the Enron shareholders' securities fraud class action suit against three investment banking firms just weeks before the trial was set to begin. The Fifth Circuit held that at best the plaintiffs stated that the banks had aided and abetted the management's fraud, but that they owed no duty to the shareholders, thus rejecting plaintiffs' theory that the banks were primary participants of a scheme to defraud. This may mark the end of the class action. See WPost, Investors Defeated In Enron Decision Investment Banks Ruled Not Liable; NYTimes, Court Rejects Suit Against Enron Banks; WSJ, Enron Class-Action Lawsuit Blocked.