Court: Bankers Did Not Scheme With Enron

WASHINGTON — The Supreme Court on yesterday dismissed a huge lawsuit growing out of the Enron debacle that sought to hold Wall Street bankers liable for scheming with the executives of the defunct Houston energy trader.

Lawyers for investment funds and pension plans, including the University of California's pension plan, had sued Merrill Lynch and the other bankers, seeking to recover more than $30 billion that was lost when Enron folded in 2001. They argued that all the key players in the scheme that fooled stockholders should be forced to pay.

In dismissing the appeal of the Regents of the University of California vs. Merrill Lynch, the court appeared to doom the big lawsuits still pending against Enron's bankers.

Yesterday's ruling is the most recent of a spate of decisions in which the courts have favored businesses. Last week, the Supreme Court rejected the notion of "scheme liability" in a closely watched stock fraud case involving a cable TV company and its vendors. In a 5-3 ruling, the court said suits for stock fraud are limited to the company that sells stock to the public, not bankers and other firms that had done deals with the company.

And last year, an American appeals court panel in New Orleans also rejected the Enron-related lawsuit. It ruled that Merrill Lynch and the other investment bankers had not directly deceived those who bought Enron's stock. Lawyers for the investors appealed to the Supreme Court and urged the justices to say that all those who profit from deception should pay. That appeal was formally rejected in a one-line order yesterday morning.