The Supreme Court today 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.
Lawyers 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.
Today’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 suits 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.
Decisions favoring businesses and protecting them from accountability from collusion and fraud against investors, whodathunk it from the Roberts Supreme Court? This precedent will also make it difficult to sue sub-prime players. As the Houston Chronicles says, the Enron-driven reforms are now unraveling. And it is this environment that the White House want YOU to direct your Social Security account…with no security.
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