X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Investors who lost money in the collapse of Enron Corp. filed a petition Friday asking the judge overseeing bankruptcy proceedings to rule on whether Merrill Lynch & Co. was a knowing participant in helping the energy trader hide massive losses. It marks an escalation of the attempts by the lawyer for the University of California, the lead plaintiff in the class action case, to recover money from brokerages and banks that had relationships with Enron. Settlements with JPMorgan Chase & Co., Citigroup Inc., Canadian Imperial Bank of Commerce, and others have already totaled $7.12 billion that will some day be divided up among investors. But Merrill Lynch has so far resisted settling. If the judge were to grant the motion, Merrill Lynch could be found liable for Enron losses before the case even goes before a jury later this year. A spokesman for Merrill Lynch did not return telephone calls on Friday. “We want the judge to rule that there is no genuine issue with the fact as to Merrill’s liability, and the amount of damages would be determined by the jury,” said William Lerach, whose law firm represents lead plaintiff University of California, which lost $144.7 million when Enron declared bankruptcy. “I think this might help focus their attention,” he said. “Merrill Lynch saw the motion before we filed it and pretty much said ‘take your best shot.’” Lerach said he prepared a similar motion and presented it to Canadian Imperial Bank of Commerce, which opted to settle rather than leave the damage amount up to a jury. CIBC agreed on Tuesday to a $2.4 billion settlement — the largest yet in the case. Friday’s motion was filed with Judge Melina Harmon of the U.S. District Court for the Southern District of Texas. The plaintiffs said in the motion that “the case against Merrill Lynch is exceptionally strong,” according to a copy of the court documents obtained by the Associated Press. Lerach won’t comment on the status of his negotiations with the other remaining defendants, which include Barclays PLC, Toronto Dominion Bank, Royal Bank of Canada, Deutsche Bank AG and the Royal Bank of Scotland. The agreements made so far have already set up the recovery in this class action lawsuit to become the largest in corporate history, topping the approximately $6 billion in settlements reached in the class action against WorldCom. Merrill Lynch has already paid $80 million to the Securities and Exchange Commission to settle civil allegations related to a bogus year-end 1999 sale of interest in floating power plant barges to the brokerage so Enron could appear to have met earnings targets. Merrill Lynch neither admitted or denied wrongdoing when settling with the SEC. Four former executives were convicted for their involvement in the sales. The proceeding have shown that defendants risk a larger fine the longer they wait to settle. JPMorgan agreed in June to pay $2.2 billion, after initially turning down a chance to settle for significantly less. Citigroup Inc. settled for $2 billion, while several smaller settlements have also raised about $500 million more. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.