Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, June 2, 2007

SEC Will Side with Investors on "Scheme" Liability Case

According to the Washington Post, the SEC has asked the U.S. Solicitor General to file papers on the side of Enron investors, who are seeking Supreme Court review of a Fifth Circuit decision that held that investors could not sue investment banks who were involved in several of Enron's fraudulent deals.  The issue for Supreme Court review is whether the banks could be held liable under a scheme liability theory, or are they simply aiders and abettors under the Central Bank rationale.  The Supreme Court has already accepted certiorari in another case addressing this issue.  William Lerach (see related story about his possible retirement) has been lobbying the SEC hard to side with the investors on this.  See WPost, SEC to Side With Enron Plaintiffs.

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