Court Rejects $40B Suit from Enron Investors

Plaintiffs claimed banks abetted fraudulent deals
By Laurel Jorgensen,  Newser Staff
Posted Jan 23, 2008 4:15 AM CST
Enron Corp.'s headquarters are shown in Houston in this Jan. 17, 2002 file photo. The Supreme Court dealt Enron investors a defeat Tuesday, Jan. 22, 2008, rejecting their lawsuit alleging securities...   (Associated Press)
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(Newser) – The Supreme Court yesterday turned away an appeal from Enron investors seeking to sue banks that loaned the company money, Bloomberg reports. A lower court ruling had blocked the investors from organizing a $40 billion class-action suit against Merrill Lynch, Credit Suisse and other banks. The investors accused the banks of helping the energy trader disguise debt as loans and financing phony trades.

Investors earlier won $7.3 billion in settlements from other Enron banks. The turndown followed last week’s Supreme Court ruling that limited shareholder suits against a company’s banks and partners. The investors hoped to distinguish their case by showing it came "in the context of fraud perpetrated by financial professionals engaged in fraudulent dealings."