Vinson & Elkins’ nightmare involvement in the Enron saga is showing no sign of coming to an end.
Just when the Texas-based giant had begun to hope the worst was behind it, lawyers for Enron’s shareholders filed papers last week (13 June) alleging that the firm “acted with knowledge or at least with reckless disregard” in its advice which contributed to Enron’s spectacular 2001 collapse.
The brief was filed before US District Judge Melinda Harmon in response to Vinson’s earlier claim that the plaintiffs have no case and calls for the firm to be removed from the lawsuit. The shareholders are seeking to recoup more than $40bn (£21.69bn) in losses. Vinson is just one of around 30 defendants, including prestigious financial institutions such as Merrill Lynch, accused of helping the company hide its true financial health from investors.
The shareholder lawsuit follows hot on the heels of Vinson’s settlement to the tune of $30m (£16.27m) in a separate lawsuit with Enron’s bankruptcy estate.
That settlement still requires approval from the US bankruptcy court, but it is understood that the firm was keen to stave off the threat of civil litigation from the estate.
Lerach Coughlin Stoia Geller Rudman & Robbins partner Bill Lerach is leading advice for the shareholders in their dispute. While John Villa, a partner with US litigation giant Williams & Connolly, is representing Vinson, which was Enron’s main outside counsel in the company’s final days.
A trial in the case is set to go before the US District Court, Southern District of Texas (Houston) on 16 October.
Former Enron chief executives Ken Lay and Jeffrey Skilling, who were found guilty of fraud in May, will be sentenced on 11 September.