Several Wall Street firms, and outside lawyers helped former executives at Enron in a "far-ranging scheme" that hid its financial condition, according to an amended lawsuit filed today by Enron employees.
The defendants were "active and critical participants in a far-ranging, multi-layered scheme designed to conceal Enron's financial condition, while they and the Enron insiders were able to continue the illusion of profitability," according to court papers.
The amended lawsuit charged that the Wall Street firms engaged in "wrongful conduct" in the collapse of the energy trading firm. Enron filed for Chapter 11 protection on December 2nd in the largest bankruptcy in US history.
Citibank, Merrill Lynch, JP Morgan Chase and Credit Suisse First Boston, Enron's Houston-based outside lawyers Vinson & Elkins LLP and certain Vinson partners were added to the amended suit.
Enron officers named in the suit include former chairman Mr Kenneth Lay, Mr Jeffrey Skilling, the former chief executive, and Mr Andrew Fastow, the former chief financial officer. Andersen's ex-chief executive, Mr Joseph Berardino, was also named.
"The wrongful conduct which underlies this case was not limited to Houston, but also took place on Wall Street, where Enron's investment banks and lawyers helped create, structure and sell securities which propped up the Enron pyramid," according to the suit, filed in US District Court in Houston.
If the plaintiffs are successful, the suit could have potentially destructive consequences for Wall Street if they are found to be liable.
"The Wall Street firms named ... provided the financial cover which let Enron grow into the nation's fifth largest company, and in the process these firms earned hundreds of millions in underwriting fees, and much more for lending, derivatives trading and financial advice," according to the suit.
The original suit was filed last year after Enron sought bankruptcy protection