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News  
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Enron plaintiffs to sue Wall St.
Amended complaint to name J.P. Morgan Chase, Citigroup for roles in Enron collapse.
April 5, 2002: 5:52 AM EST
By Luisa Beltran

NEW YORK (CNN/Money) - The lead plaintiff suing Enron Corp. and Arthur Andersen will expand its lawsuit to add key Wall Street firms such as J.P. Morgan Chase, Citigroup and Credit Suisse First Boston as defendants, people familiar with the litigation said Thursday.

The University of California, the lead plaintiff in the Enron shareholders' class-action lawsuit, will file an amended complaint in federal court on Monday, attorneys familiar with the case said. In addtion to J.P. Morgan Chase, Citigroup and Credit Suisse, CIBC World Markets, Merrill Lynch and Lehman Bros. will also be named, these people said.

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The lawsuit will allege that some of the banks helped Enron structure its off-the-books partnerships while also lending money to the now bankrupt energy trader.

"Enron and Andersen have no money," said Vincent Cappucci, a partner at Entwistle & Cappucci, which represents the New York City and State of Florida pension funds in a suit against Enron and Andersen. "The challenge here is to bring in every responsible party so that you can make the investors whole again."

Cappucci said it was more important for shareholders to find the culpable so-called second-tier defendants since Enron is in bankruptcy and Andersen is struggling to avoid collapse.

In February, the University of California was appointed lead plaintiff in the shareholder class-action, which currently names 29 Enron executives and Andersen as defendants.

The amended complaint will also claim that Enron senior executives took part in more insider trader than previously reported, one person familiar with the changes said. Enron executives and directors sold about $1.3 billion worth of stock in the last three years, with CEO Ken Lay booking $119 million in profit, according to a study from Thomson Financial commissioned by CNN.

Houston-based Enron filed the largest bankruptcy in U.S. history on Dec. 2. The once mighty energy trader used its many partnerships to hide $1 billion in debt and inflate profits, according to a report by independent members of Enron's board. Andersen, as Enron's auditor for 16 years, signed off on the company's financial statements.

Chicago-based Andersen is itself teetering on collapse. The Department of Justice indicted Andersen for allegedly obstructing justice when it shredded Enron Corp. documents days after it found out about a federal investigation. Since the March 14 indictment, Andersen has lost more than 100 public audit clients and is now considering a public admission of responsibility for destroying the Enron documents.

The amended complaint will also name Vinson & Elkins and Kirkland & Ellis, law firms that advised Enron. Vinson & Elkins is the firm that Lay assigned to investigate Enron thousands of partnerships.

The University of California declined to comment. The university is managing the class-action lawsuit on behalf of Enron shareholders.

-- CNNfn's Brett Gering contributed to this story  Top of page






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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.