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Merrill Lynch and CSFB appeal Enron ruling to Fifth Circuit



I have previously written on the extortionate lawsuits against banks who dared to business with Enron before its bankruptcy, using implausible conspiracy theories by which the banks agree to lose money to help Enron further a fraud; the suits seek to hold the banks liable for $40 billion, so many have settled for pennies on the dollar—in some cases not much more than the actual unrecoverable costs of defending the suit over several years—rather than risk gigantic liability. Since not even the most ardent academic defenders of the litigation system argue that juries get complex financial cases correct 95% of the time, paying blackmail to Lerach Coughlin is a reasonable financial decision. (Snide reflexive defenders of the litigation lobby argue that no one would settle for a billion dollars when they've done nothing wrong, but this doesn't explain why plaintiffs would surrender $39 billion in value if they're so obviously in the right.)

Two financial firms, CSFB and Merrill Lynch, however, have refused to give in to the extortion, and have fought a shrugging district court's class certification ruling to the Fifth Circuit, which held oral argument Monday. [Bloomberg/NYT] The AEI Liability Project has posted the briefs at the February 9 entry in the "Documents in the News" page.

 

 


Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.