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Justices Reject Appeal Of Enron Investors

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Los Angeles Times

Published: January 23, 2008

WASHINGTON - The Supreme Court on Tuesday dismissed a huge lawsuit growing out of the Enron debacle that sought to hold Wall Street bankers liable for scheming with the executives of the defunct Houston energy trader.

Attorneys for investment funds and pension plans, including the University of California's pension plan, had sued Merrill Lynch and the other bankers, seeking to recover more than $30 billion that was lost when Enron folded in 2001. They argued that all the key players in the scheme that fooled stockholders should be forced to pay.

In dismissing the appeal of the Regents of the University of California vs. Merrill Lynch, the court appeared to doom the big lawsuits still pending against Enron's bankers.

Tuesday's ruling is the most recent of a spate of decisions in which the courts have favored businesses. Last week, the Supreme Court rejected the notion of "scheme liability" in a closely watched stock fraud case involving a cable TV company and its vendors. In a 5-3 ruling, the court said lawsuits for stock fraud are limited to the company that sells stock to the public, not bankers and other firms that had done deals with the company.

Last year, a U.S. appeals court in New Orleans also rejected the Enron lawsuit.

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