A federal judge has dismissed a class-action lawsuit alleging that JPMorgan Chase helped Enron conceal fraud, according to published accounts.
The JPMorgan shareholders who brought the suit claimed that they invested in the bank based on its reputation for integrity and financial discipline, but that it helped Enron hide billions of dollars of debt, reported Reuters.
U.S. District Judge Sidney Stein reportedly ruled that the plaintiffs failed to show that JPMorgan deceived or intended to deceive them by downplaying its exposure to Enron or overstating its own integrity. The judge also rejected claims that former JPMorgan chairman and chief executive officer William Harrison should be held liable, Reuters noted.
Reuters pointed out that Judge Stein dismissed a similar complaint in March 2005 but allowed the plaintiffs to refile their case. This time he dismissed the case with prejudice, so investors cannot submit their lawsuit again.
“This version of the complaint…suffers from the same flaws as the first,” Stein reportedly wrote. “If plaintiffs’ allegations are borne out, it would be not they but the shareholders of Enron — the real victims of the energy giant’s collapse — who would have been defrauded.”
Indeed, in August 2005 JPMorgan Chase agreed to pay $350 million to Enron, and to drop its own claims against the company, to settle “MegaClaims” litigation stemming from Enron’s bankruptcy.
Two months earlier, however, JP Morgan agreed to pay $2.2 billion as part of a broad settlement with investors stemming from its role as an investment banker to Enron.
Back in June 2005, CFO.com reported that JPMorgan Chase agreed to pay $2.2 billion as part of a broad settlement with investors stemming from its role as an investment banker to Enron Corp. Altogether, the banks agreed to pay more than $7 billion.