Disappearing civil Enron

The criminal Enron cases have been gradually disappearing. And now, in the “now they tell us” department, as discussed in today’s WSJ, a Fifth Circuit panel has blocked a securities class action against banks and securities firms in connection with the Enron collapse. Other banks had entered into multi-billion dollar settlements, which will withstand this decision.

This was always a dubious case, but upheld at the trial level based on Bill Lerach’s masterful novel-like complaint. Lerach’s work is discussed in my article with Bruce Kobayashi, Class Action Lawyers as Lawmakers.  Of course, once the motion to dismiss was denied, this put a lot of pressure on the banks to settle or face the massive costs of trial and risk of staggering liability.

The Eighth and Ninth circuits had previously disagreed on the underlying legal issues. Maybe in 2080 the Supreme Court will opine.  Good thing we have uniform federal law.