Oh, The Tangled Web We Weave…
After the conference ended today at noon, I decided to do a little sightseeing. One place I had never been and always wanted to go is the Supreme Court. It was 95 degrees Fahrenheit today in Washington DC, so I limited my outing to a short tour of the court and then returned to my room at the Mayflower and wrote this while the air conditioning was set at Fahrenheit 60.
Tonight I will attend the theater. There’s a Shakespeare festival going on and I’m planning on some Stoppard: Rosencrantz and Guildenstern Are Dead.
While I was listening to the too casual for such a sacred place docent at the Court, my Blackberry kept going off with Google Alerts, as it does so often at the most inappropriate times. One of the Alerts was an update from the blog The Daily Caveat, reminding me of the issues surrounding Bill Lerach and Milberg Weiss. There’s a case to be heard in the Supreme Court next term regarding scheme liability that could have a big impact on the audit firms.
SEC to Side With Enron Plaintiffs
Agency Asks Court to Back Shareholders
“Federal securities regulators will throw their weight behind investors in a big-money dispute that could resolve whether shareholders can sue bankers (and law firms and maybe auditors too???) who enabled their corporate clients to engage in fraud, two people familiar with the decision said yesterday.
The Securities and Exchange Commission has asked the U.S. Solicitor General to file court papers supporting investors in an upcoming Supreme Court case, an action that has not been made public. The agency’s decision follows intense lobbying by industry groups, unions and plaintiff lawyers, including well-known California attorney William S. Lerach.
The move is a significant victory for Lerach, who won $7.3 billion in settlements with banks and law firms that helped Enron disguise its financial problems. If the Supreme Court adopts the agency’s position, it could breathe new life into a stalled case filed by Enron shareholders against Merrill Lynch and Barclays Bank. …Securities class-action lawsuits can be lucrative for plaintiffs’ lawyers, underscoring the importance of the SEC’s position to companies and the lawyers who sue them. Lerach and his firm have not yet collected their share of the $7.3 billion in Enron settlement proceeds, estimated to be 8 to 10 percent, and Lerach could have to forfeit his portion as part of a criminal case or plea agreement.
The University of California, the lead plaintiff in the Enron case, issued a statement yesterday saying it would move ahead with the same legal team even if Lerach departs.
An SEC spokesman declined to comment on the agency’s decision yesterday. But last month, SEC Chairman Christopher Cox told lawmakers the government “would do its very best to make sure that injured Enron investors receive the full amount of recovery to which they are entitled in our legal system.”
The Supreme Court will hear the case, over an issue called scheme liability, in its next term.”