Toronto firm may pursue lawsuit over Enron bond sales: U.S. judge
By Jonathan Stempel
NEW YORK (Reuters) - A Toronto investment firm that has spent 15 years suing Enron Corp's banks to recoup losses on bonds it bought shortly before the energy company went bankrupt may pursue a lawsuit seeking damages from three of those banks, a U.S. judge ruled on Friday.
Silvercreek Management Inc claimed to suffer heavy losses on more than $100 million of Enron bonds it bought less than two months before Dec. 2, 2001 bankruptcy.
It sought to hold Credit Suisse Group AG (CSGN.S: Quote), Deutsche Bank AG (DBKGn.DE: Quote), Bank of America Corp's (BAC.N: Quote) Merrill Lynch unit, and former Enron Chief Executive Officer Jeffrey Skilling liable for overseeing many sham and off-balance-sheet transactions that fueled Enron's demise.
In a 43-page decision, U.S. District Judge Paul Oetken in Manhattan said Silvercreek and its affiliates may pursue claims that the banks aided Enron's fraud and conspired to commit fraud.
He cited "specific and wide-ranging" allegations that the banks knew Houston-based Enron was hiding billions of dollars of debt and using sham transactions to bolster its bottom line.
Though Silvercreek's allegations "do not plead a formal, back-room agreement among all defendants and Enron," they are "sufficient to state a conspiracy claim," Oetken wrote.
Some claims were dismissed. The judge said Silvercreek may also pursue a fraud claim against Skilling, citing his alleged knowing and direct involvement in Enron's financial misconduct.
Credit Suisse and Skilling's lawyer Jeffrey Barker declined to comment. Lawyers for Deutsche Bank and Bank of America did not immediately respond to requests for comment. Continued...