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Six banks, two law firms added to Enron suit

At least six investment banks and two law firms that advised Enron Corp and auditor Andersen will be added to a huge shareholder class action suit over the bankrupt energy trader's collapse, sources close to the case said on Thursday.

The banks and law firms will be named in an amended complaint set to be filed on Monday, two sources told Reuters. If the plaintiffs are successful, the suit could have potentially destructive consequences for Wall Street if they are found to be liable.

The suit will name investment banks Merrill Lynch & Co, Deutsche Bank AG, JP Morgan Chase and Credit Suisse First Boston, Citigroup, Barclays Bank Plc, law firms Vinson & Elkins, Enron's Houston-based outside counsel, and Andersen lawyers Kirkland & Ellis of Chicago, the sources said.

Consultants McKinsey and Co, the firm which former Enron chief executive Jeff Skilling left to join Enron, and possibly other banks are expected to be named, the sources said. About 35 to 45 Enron officers and directors will be named in the new complaint, as will about half that many Andersen partners, the sources said.

Vinson & Elkins has said it did nothing wrong, and will fight the case. Officials at the banks, McKinsey and Kirkland & Ellis could not be reached for comment after business hours.

Earlier Reuters reports had said that most of those firms were expected to be targets in the suit, filed last year after Houston-based Enron plunged into the largest US bankruptcy ever.

ANDERSEN NOW A LESS PROMISING TARGET

The suit initially named only Andersen LLC and 29 top Enron insiders, since Enron's Decemebr 2 bankruptcy automatically froze all litigation against the corporate entity itself.

But as Andersen's prestige and money have dwindled in the wake of a criminal obstruction of justice indictment for allegedly destroying Enron documents, it has become a less promising target for plaintiffs looking to recover more than a billion dollars.

The lead plaintiffs in the case, the University of California Board of Regents, had no comment on the new defendants, UC spokesman Trey Davis said. The university, which lost $145 million, is represented by Milberg Weiss Bershad Hynes & Lerach, a San Diego, California-based law firm that is among the most aggressive in pursuing shareholder suits.

Joseph Jamail, the heavyweight lawyer representing Vinson & Elkins, earlier told Reuters that the law will stymie plaintiffs who hope to add his client just to get at their deep pockets.

"You can't hold an outsider or lawyer responsible for something he didn't create," Jamail said. "V&E was not involved in making decisions of any kind for these people - of any kind. These are all business decisions."

V&E lawyers were strictly responsible for ensuring that Enron's dealings, which were handled by in-house lawyers first, complied with existing law, he said.

Jamail rose to national fame for winning an $11 billion verdict for Pennzoil against Texaco, who were fighting over who would buy Getty Oil.

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