Supreme Court Turns Away Suit Against Banks by Enron Investors

Following up on its Stoneridge ruling on Tuesday in which it limited investor lawsuits, the U.S. Supreme Court rejected a bid by former Enron investors to recover as much as $40 billion from investment banks associated with that failed energy company.

The justices refused to hear the Enron case, instead vacating it to the Ninth Circuit Appeals Court for further consideration in light of its ruling in Stoneridge Investment Partners v. Scientific Atlanta.

In Stoneridge, the court found that the investors did not have the private right to sue because they did not rely upon the statements or representations made by the suppliers. The case was a defeat for investors who alleged that two suppliers of cable TV set-top boxes, Scientific-Atlanta and Motorola, colluded with Charter Communications Inc. to deceive Charter’s stockholders and inflate the price of the cable TV company’s stock.

In the Enron-related suit, investors have similarly targeted third parties includng Merrill Lynch & Co., Inc., Barclays and Credit Suisse First Boston.

The Enron case now falls back on lawyers for the shareholders who must convince the federal appeals court in Houston that the investment banks mislead them about the finances of Enron.

Enron was a major energy and communications company, with claimed revenues of $111 billion in 2000. Its collapse cost investors millions of dollars and thousands of people their jobs and pension plans.

The case is Avis Budget Group, Inc. et al v. Calif. State Teachers Retirement.

Latest Comments

• January 23, 2008 at 4:23 am

  Nobody Important says:

  I think that a lot of this is because we don't have many decent people who want to run for office at the higher levels in particular. We have spent the last 30 years dragging... read more
• January 23, 2008 at 3:51 am

  norm says:

  While a tend to agree in principle with the writers assessment, I feel the failure does not lie solely at the feet of the banks. Granted they are the vehicle that is allowing ... read more
• January 23, 2008 at 1:17 am

  concerned agent says:

  after the stock market crash in 1929 congress suddenly realized that the banks control of ALL aspects of the financial world was the primary cause of the crash. When the finan... read more