UPDATE 2-Judge throws out long-running Enron investor case

Published: 08 Mar 2009 17:45:30 PST

* Judge rules for Credit Suisse, Barclays, Merrill Lynch

* Case does not affect over $7 bln in prior settlements

* Lead plaintiff to review ruling to determine next steps (Adds comments, background, byline)

NEW YORK, March 6 - A U.S. judge has dismissed Enron investors' long-running legal claims against three big financial firms over their dealings with the collapsed energy trader.

Credit Suisse Group AG, Barclays Plc and Merrill Lynch, now part of Bank of America Corp, were granted summary judgment and the case against them was thrown out, according to the ruling by U.S. District Judge Melinda Harmon in Houston.

The judge's ruling, dated Thursday, does not affect more than $7 billion in combined settlements that a group of other financial companies, including Citigroup and JPMorgan Chase & Co, agreed to pay Enron investors previously to settle the litigation. Much of that money has already been distributed.

Those settlements were the biggest ever in U.S. securities litigation, and Enron Corp investors have continued to press their case against the remaining bank defendants in hopes of securing more money for pension funds, individuals and others who lost money on the Texas energy company's 2001 collapse.

Plaintiffs in the case, led by the University of California, contend the banks played a role in accounting misdeeds that led to the company's bankruptcy.

"We are naturally disappointed by this latest ruling but will be reviewing it carefully to determine possible next steps in pursuing the case," Trey Davis, the university's director of special projects, said on Friday.

Investors, seeking deep-pocketed defendants once Enron imploded, filed the original case in April 2002 and sought $40 billion in damages from an array of financial firms, contending they had violated securities laws through complex transactions with Enron.

While Citigroup, JPMorgan and others settled the case, Credit Suisse, Barclays and Merrill continued to fight it. They won a huge victory in March 2007 when an appeals court rejected class-action, or group, status for the investors. The court threw out the plaintiffs' argument that the banks were primary participants in the fraud that led to Enron's collapse.

After the Supreme Court declined to review the case, the plaintiffs brought it back before Judge Harmon, hoping she would allow it to proceed to trial under a revised theory of liability. The new ruling rejects those revised arguments.

Credit Suisse spokesman Duncan King said the company is "very pleased that the federal court has dismissed all claims" against it.

A Merrill spokesman declined to comment, while a Barclays representative could not immediately be reached.