Lehman Brothers obtains dismissal of Texas securities class action filed by Enron Corporation securities holders
Clients Lehman Brothers Holdings Inc.
Jones Day represented Lehman Brothers Holdings Inc and Lehman Brokers Inc. (collectively "Lehman") in a securities fraud class action filed by purchasers of Enron Corporation's publicly traded securities. The litigation arose out of the well-publicized collapse of Enron. The Consolidated Complaint alleges that the financial institutions defendants engaged in a fraudulent scheme consisting of (i) inflation and falsification of Enron's profits over several years; (ii) hiding billions of dollars of debt that should have been reported on Enron's financial statements; and (iii) misrepresenting the current success and future prospects of certain of Enron's business divisions. The Consolidated Complaint alleged that the fraud was accomplished through the use of special purpose entities and partnerships to do transactions with Enron, through improper accounting tricks, by providing Enron access to capital markets and the issuance of false or misleading analysts' reports on Enron in order to bolster Enron's stock price and credit rating. The Consolidated Complaint alleged the following claims against Lehman: (i) violation of §§ 10(b) and 20(a) of the 1934 Act and Rule 10b-5; (ii) violation of §§ 11 and 15 of the 1933 Act as underwriter of several of Enron's securities offerings; and (iii) violation of Texas Securities Act, Article 581-33 as underwriter of an offering of Enron notes. After obtaining dismissal of the 10b-5 claim, the parties settled the case on mutually agreeable terms.
Newby v. Enron Corp., No. H-01-3624 (S.D. Tex.)