In a brief filed Monday in federal appeals court, 30 states said that a number of investment banks are liable for their alleged role in Enron Corp.’s accounting fraud.

Authored by Texas Attorney General Greg Abbott, attorneys general from the states used legal arguments from 2002 Enron litigation brought by the Securities and Exchange Commission in the brief to make the case that Merrill Lynch & Co., Credit Suisse and other investment banks should be held liable as participants in the fraud. The suit seeks billions of dollars in damages.

The SEC pursued Merrill, JPMorgan Chase & Co. and Citigroup Inc. over the banks’ role in Enron's scheme, winning tens of millions of dollars in settlements in 2003.

Attorneys for Merrill recently asked the SEC to file a brief in the U.S. 5th Circuit Court of Appeals in New Orleans in support of the firm's position that on legal grounds, it should not be held liable in the case -- which published reports said that agency staff had at one point considered.

A Houston federal judge has granted the case status to proceed as a class-action suit, a decision that is being reviewed by the appeals court in New Orleans.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access