Citigroup, JP Morgan Chase & Co and other Wall Street banks were named as defendants in a lawsuit filed by a Los Angeles fund management company alleging they aided bankrupt energy trader Enron in an "unprecedented" fraud.
The lawsuit was filed in Los Angeles Superior Court on Wednesday by two funds run by Oaktree Capital Management and seeks damages against Wall Street's top investment banks for their alleged role in "creating, fueling and profiting" from Enron's complex financial deals.
Bear Stearns, Credit Suisse First Boston, Donaldson, Lufkin & Jenrette, and Lehman Brothers Inc were also named as defendants.
Representatives for the brokerages named as defendants could not be immediately reached for comment. Salomon Smith Barney, the investment banking arm of Citigroup, was also named separately as a defendant.
Oaktree claims in its suit that the banks and investment firms "intentionally distorted" figures and concealed facts from ratings agencies and institutional investors while helping Enron obtain billions of dollars in loans that the Houston-based energy giant falsely characterized as prepaid commodity trades.
Citigroup and J.P. Morgan are already under investigation from Congress over questionable finance deals they set up for Enron. The energy trader went bankrupt in December after using a shadowy web of off-balance sheet deals to hide debt and inflate cash flow.
Both banks have said they are cooperating fully with all inquiries.
Los Angeles-based Oaktree, which has over $15 billion under management and specializes in investment in troubled companies and distressed bonds, is seeking unspecified damages, restitution and attorney's fees.