The little Enron trial in Brenham got a lot bigger Thursday when an appellate court paved the way for Wall Street to join the fray.
The Texas 14th Court of Appeals ruled that Washington County Judge Terry Flenniken abused his discretion by refusing to add seven financial institutions to the civil lawsuit. The three-judge appellate panel ruled that the rural judge must grant defendant Arthur Andersen's request that the banks be added to the case.
Until the appellate court halted the case in August, the Brenham case was expected to be the first Enron shareholder fraud lawsuit to reach a jury, with a November trial date. It was filed on behalf of a handful of Washington County residents who bought stock after former Enron Chairman Ken Lay spoke at a local Chamber of Commerce forum.
The only defendants in the case were Lay, ex-Enron CEO Jeff Skilling, ex-CFO Andrew Fastow, Arthur Andersen and a few ex-Andersen executives.
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"All Andersen ever wanted was if there is going to be a trial about what happened at Enron that all the primary actors who are potentially responsible will be there," said Andy Ramzel, one of Andersen's attorneys.
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Andersen attorneys Ramzel and Rusty Hardin asked that J.P. Morgan Chase & Co., Merrill Lynch, Bank of America, Credit Suisse First Boston, Canadian Imperial Bank of Commerce, Barclays and Lehman Bros. be added to the case as defendants. They also want to add Michael Kopper, a former Enron executive who pleaded guilty to fraud and money laundering.
The good news: As Andersen's attorney pointed out, this list of perps is much closer to those actually responsible for the Enron debacle.
The bad news: This will likely delay the proceedings as late or later than the shareholder class-action suit which is scheduled for October 2005 — eleven months after the presidential election that figures so prominently in the background of this drama.
