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Fifth Circuit Holds Secondary Actors Cannot Be Primarily Liable Under Securities Laws For Conduct Alone
On March 19, 2007, the United States Court of Appeals for the Fifth Circuit ruled that Credit Suisse First Boston, Inc., Merrill Lynch & Co., Inc. and Barclays PLC (collectively, the “banks”) could not be held liable as primary violators of Section 10(b) of the 1934 Securities and Exchange Act (the “1934 Act”) for involvement in challenged partnerships and transactions of Enron Corporation (“Enron”). Plaintiffs, shareholders of Enron, filed suits beginning in 2001 alleging that the banks and others participated in partnerships and transactions that allowed Enron to misstate its financial results. Plaintiffs sought to hold the banks liable as primary violators under Section 10(b). The United States District Court for the Southern District of Texas (Harmon, J.) issued an order certifying the suit as class action on June 5, 2006.
Haynes and Boone, LLP, acted as Texas litigation counsel in this matter on behalf of Credit Suisse First Boston (USA), Inc. and Credit Suisse First Boston LLC, together with the New York law firm of Cravath Swaine & Moore LLP.