Enron investors’ case won’t be considered

WASHINGTON — The Supreme Court dealt a probable fatal blow Tuesday to Enron Corp. investors’ efforts to recover $40 billion from Wall Street banks in the 2001 collapse of the Texas energy company.

Without comment, the justices refused to hear arguments in the Enron case. Attorneys for shareholders immediately vowed to return to federal court in Houston in an attempt to prove that the investment banks misled the public and helped conceal Enron’s true financial condition.

“It’s an uphill battle and we’ll keep fighting,” Patrick Coughlin, the lead lawyer for the stockholders, said.

Attorney Greg Markel, a lawyer not connected with the case who represents corporate clients in securities fraud lawsuits, said shareholders’ “chances of succeeding … are nearly zero.”

Enron’s demise wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans at what had been the seventh-largest company in the country.

The Supreme Court’s refusal to hear the Enron appeal was anticipated following last week’s ruling in another securities fraud case in which the justices ruled that a company’s investors must show they relied on deceptive acts committed by third parties before they can be sued.

In the case a week ago, the third parties were suppliers to one of the nation’s largest cable TV companies. In the case of Enron, the third parties are Merrill Lynch &Co., Credit Suisse First Boston and Barclays Bank PLC.

In the Enron lawsuit, the 5th U.S. Circuit Court of Appeals in New Orleans already has ruled that the banks did not act directly in the market for Enron securities.

Coughlin says the legal team for Enron investors has evidence that “the analysts knew what was going on” and that the lawyers for the Enron investors can show that the banks “buoyed the market for Enron securities.”

In an earlier ruling, the federal judge in the Enron case threw out the glowing statements of the research analysts praising Enron, saying lawyers for the investors had not alleged that the analysts knew their statements about the company’s financial health were misleading.

To date, Enron plaintiffs have settled for $7.3 billion with several financial institutions, including JPMorgan Chase &Co., Citigroup and Canadian Imperial Bank of Commerce.

Under the settlements, the payout to investors would be $6.79 per share of common stock and $168.50 per share of Enron’s stocklike preferred shares, according to a mailing sent to Enron investors, who have until April 30 to decide whether they want to participate in the settlement. Coughlin said lawyers for the investors spent $127 million in time and $50 million in out-of-pocket expenses on behalf of Enron investors.

Talk to us

More in Herald Business Journal

Members of Gravitics' team and U.S. Rep. Rick Larsen stand in front of a mockup of a space module interior on Thursday, August 17, 2023 at Gravitics' Marysville facility. Left to right: Mark Tiner, government affairs representative; Jiral Shah, business development; U.S. Rep. Rick Larsen; Mike DeRosa, marketing; Scott Macklin, lead engineer. (Gravitics.)
Marysville startup prepares for space — the financial frontier

Gravitics is building space station module prototypes to one day house space travelers and researchers.

Orca Mobility designer Mike Lowell, left, and CEO Bill Messing at their office on Wednesday, Aug. 16, 2023 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Could a Granite Falls startup’s three-wheeler revolutionize delivery?

Orca Mobility’s battery-powered, three-wheel truck is built on a motorcycle frame. Now, they aim to make it self-driving.

Catherine Robinweiler leads the class during a lab session at Edmonds College on April 29, 2021. (Kevin Clark / The Herald)
Grant aids apprenticeship program in Mukilteo and elsewhere

A $5.6 million U.S. Department of Labor grant will boost apprenticeships for special education teachers and nurses.

Peoples Bank is placing piggy banks with $30 around Washington starting Aug. 1.
(Peoples Bank)
Peoples Bank grant program seeks proposals from nonprofits

Peoples Bank offers up to $35,000 in Impact Grants aimed at helping communities. Applications due Sept. 15.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
Arlington’s Eviation selects Seattle firm to configure production plane

TLG Aerospace chosen to configure Eviation Aircraft’s all-electric commuter plane for mass production.

Jim Simpson leans on Blue Ray III, one of his designs, in his shop on Friday, August 25, 2023, in Clinton, Washington. (Ryan Berry / The Herald)
Whidbey Island master mechanic building dream car from “Speed Racer”

Jim Simpson, 68, of Clinton, is using his knowledge of sports cars to assemble his own Mach Five.

Inside the new Boeing 737 simulator at Simulation Flight in Mukilteo, Washington on Wednesday, Sept. 20, 2023. (Annie Barker / The Herald)
New Boeing 737 simulator takes ‘flight’ in Mukilteo

Pilots can test their flying skills or up their game at Simulation Flight in Mukilteo.

An Amazon worker transfers and organizes items at the new PAE2 Amazon Fulfillment Center on Thursday, Sept. 14, 2023, in Arlington, Washington. (Ryan Berry / The Herald)
Amazon cuts ribbon on colossal $355M fulfillment center in Arlington

At 2.8 million square feet, the facility is the largest of its kind in Washington. It can hold 40 million “units” of inventory.

A computer rendering of the North Creek Commerce Center industrial park in development at 18712 Bothell-Everett Highway. (Kidder Mathews)
Developer breaks ground on new Bothell industrial park

The North Creek Commerce Center on Bothell Everett Highway will provide warehouse and office space in three buildings.

Dan Bates / The Herald
Funko president, Brian Mariotti is excited about the growth that has led his company to need a 62,000 square foot facility in Lynnwood.
Photo Taken: 102312
Former Funko CEO resigns from the Everett company

Brian Mariotti resigned Sept. 1, six weeks after announcing he was taking a six-month sabbatical from the company.

Cash is used for a purchase at Molly Moon's Ice Cream in Edmonds, Washington on Wednesday, Aug. 30, 2023. (Annie Barker / The Herald)
Paper or plastic? Snohomish County may require businesses to take cash

County Council member Nate Nehring proposed an ordinance to ban cashless sales under $200. He hopes cities will follow suit.

A crowd begins to form before a large reception for the opening of Fisherman Jack’s at the Port of Everett on Wednesday, August 30, 2023, in Everett, Washington. (Ryan Berry / The Herald)
Seafood with a view: Fisherman Jack’s opens at Port of Everett

“The port is booming!” The new restaurant is the first to open on “restaurant row” at the port’s Waterfront Place.