A federal choose in Houston has thrown out a lawsuit accusing UBS Group AG of hiding fraud by its shopper Enron Corp from retail clients, a choice that will finish a 15-year authorized battle stemming from the vitality firm’s December 2001 chapter.
In a 228-page determination on Tuesday, U.S. District Decide Melinda Harmon stated UBS PaineWebber brokerage clients failed to indicate that the Swiss financial institution meant to defraud them into shopping for Enron securities.
The purchasers accused UBS of making an attempt to generate extra charges by participating in 5 transactions with Enron, comparable to loans and be aware choices, that had no reliable enterprise objective, and which had been designed to create a facade that Enron was wholesome.
However the choose stated “it was Enron (and its accountants and attorneys) … that was accountable for utilizing these transactions to ‘prepare dinner its books,’ creating its allegedly fraudulent monetary statements,” and finally defraud the investing public.
The plaintiffs did not specify “precisely what nonpublic, materials data the usentities knew about Enron, who found it, when, how, and beneath what circumstances and why it was fraudulent,” Harmon wrote.
Legal professionals for the plaintiffs didn’t instantly reply on Wednesday to requests for remark. UBS didn’t instantly reply to comparable requests.
The plaintiffs selected to sue independently of different Enron buyers who pursued comparable claims in nationwide litigation.
Harmon dismissed claims towards UBS by one other group of Enron buyers final Aug. 2.
A $7.2 billion securities class-action settlement in 2006 with a number of banks and different defendants over Enron’s collapse stays the most important on document.
As soon as ranked seventh on the Fortune 500 record of huge U.S. firms, Enron went bankrupt on Dec. 2, 2001.
Its demise led to reforms together with the federal Sarbanes-Oxley Act of 2002, and was the premise for the Oscar-nominated 2005 documentary “Enron: The Smartest Guys within the Room.”
A number of executives went to jail, together with former Enron Chief Govt Jeffrey Skilling for fraud and different offenses.
He’s eligible for launch in February 2019, federal jail information present, after having his sentence shortened to 14 years from 24 years in 2013.
Kenneth Lay, Skilling’s predecessor and successor as chief government, was additionally convicted of fraud, however died in 2006 earlier than he might be sentenced.
The case is Lampkin et al v UBS PaineWebber Inc et al, U.S. District Court docket, Southern District of Texas, No. 02-00851.
(Reporting by Jonathan Stempel in New York; Modifying by Phil Berlowitz)