Coalition of Former Enron Shareholders Asks the SEC for Help In Holding Banks Accountable for Their Role in Enron’s Fraud Scheme

A coalition of consumer and labor groups that are plaintiffs in the shareholder litigation against Enron Corp. say that they are asking the Securities and Exchange Commission to talk to the U.S. Supreme Court on their behalf.

The University of California is a lead plaintiff in the case, and its attorney, Christopher Patti, says the shareholders deserve to have their case presented during trial before the Supreme Court. He also said that he felt that the law was broad enough so that parties, such as financial institutions that were active, key, and consenting participants in the Enron fraud case and had intentionally engaged in deceptive conduct to purposely mislead investors, could be included.

On May 8, a group of Enron shareholders that claim that the energy trading giant allegedly defrauded them sent a letter to the SEC asking it to file an amicus brief with the high court explaining why banks and other parties took part in Enron’s fraudulent scheme and should be held accountable.

On March 19, the U.S. Court of Appeals for the Fifth Circuit had reversed an earlier court ruling, concluding that even though Enron had a responsibility to shareholders for the fraud scandal, banks did not. It is this case that shareholders have asked the Supreme Court to review.

Also, in March, the Supreme Court agreed to take a look at a federal appeals court’s ruling that equipment vendors to cable television provider Charter Communications could not be held responsible for their alleged roles in Charter Communication’s alleged fraud scheme to make its financial performance seem better than it actually was. In this case, the U.S. Court of Appeals for the Eight Circuit decided that the vendors had-at the most-aided and abetted the violations.

Patti says the plaintiffs are encouraging the SEC to join them in asking for “their day in court.”

SEC Chairman Christopher Cox has stated that investors have a right, through the judicial process, to recover their losses.

Shepherd Smith and Edwards has an excellent track record for helping their investor clients recover their losses resulting from the inappropriate actions of members of the securities industry. To schedule your free consultation with one of our attorneys, call us at 1-800-259-9010 or contact Shepherd Smith and Edwards online.

It will be interesting to learn whether the SEC will continue to represent the Wall Street special interests by taking yet another a legal position against investors. By taking positions against the very investors it is charted to protect, the SEC encouraged the courts to side with white collar criminal. This further guts the SEC of its own regulatory powers. The position taken by the SEC in this Enron case can become a defining moment to determine whether the SEC is only a “Fox” in charge of the henhouse or whether the SEC “Fox” is actually going to publicly eat the chickens.

Related Web Resources:

Regents of University of California v. Credit Suisse First Boston (USA) (PDF)