The Supreme Court has ruled that investors cannot sue 3rd parties, such as accountants, banks, laywers, who enable corporate fraud. This leaves it up to the DOJ and the SEC.
Court Declines Enron Investors' Appeal
By Carrie Johnson and Robert Barnes
Washington Post Staff Writers
Wednesday, January 23, 2008; Page D01
The Supreme Court yesterday declined to hear an appeal by Enron investors suing major banks that allegedly helped the Houston company disguise its financial problems, all but closing the door on efforts by shareholders to hold third parties responsible for crippling stock losses.
The court's rejection comes less than a week after it ruled, 5 to 3, in a related case that suppliers, lawyers and accountants could not be held financially liable for market losses unless investors could show they relied on the third parties to buy or sell stock.
In the Enron case, investors claimed that banks including Merrill Lynch, Credit Suisse and Barclays participated in transactions that allowed Enron to hide its financial problems and unload stock and debt in the years before it fell apart. The banks denied the claims and refused to settle under intense pressure from plaintiff lawyers, arguing they had done nothing wrong and that the law shielded them from investor lawsuits.
Wednesday, January 23, 2008
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