In light of recent Stoneridge ruling, court sends case back to 9th Circuit Appeals Court
Following up on its Stoneridge ruling in late January 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 including 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 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.
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