US court dismisses Enron banks class action
Posted by Draving on 03/20/07 in General News
A group of banks including Barclays and the Royal Bank of Scotland have won a significant legal victory in the US after an appeal court threw out a $40 billion (£20.6 billion) class action lawsuit brought by Enron investors.
The ruling, which came less than a month before the case was due to go to trial, does not prevent investors from suing the banks but means they must take action as individuals rather than a group, known as a “class” in the US.
Banks are keen to avoid class action lawsuits because the combined might thousands of shareholders gives claimants access to the best lawyers and often results in high-value settlements.
The Court of Appeals in New Orleans overturned the original decision that the investors should be allowed to sue as a class, saying that the judgment was based on a “legal error”.
Bill Lerach, the investors’ lawyer, said it was “a terrible day for the victims of the Enron fraud” because the bulk of investors do not have the means to bring an individual case and so joining a class action was their only hope of securing compensation.
Mr Lerach said he plans to appeal to the US Supreme Court.
A spokesman for Barclays said the bank “is very pleased with the ruling and grateful that the court agreed with its views.”
The other banks named as defendants in the class action are Merrill Lynch, Credit Suisse, Royal Bank of Canada and Toronto-Dominion Bank.
http://business.timesonline.co.uk/
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