Mining analysts point to smaller companies

Section:

By Kevin Drawbaugh

WASHINGTON, March 26 (Reuters) -- Enron Corp. shareholders
are expected to unveil a lawsuit next week against big
investment banks with ties to the bankrupt energy trader,
threatening a legal battle with potentially devastating
consequences for Wall Street, lawyers said on Tuesday.

Frustrated at the dwindling resources of Enron and its former
auditor Andersen, plaintiffs' lawyers were on the verge of
making claims to the deep pockets of merchant banks by alleging
they actively helped Enron to deceive investors, legal sources
said.

If it can be proved in court that giants such as J.P. Morgan
Chase, Credit Suisse First Boston, and others were in cahoots
with Enron, plaintiffs' lawyers stand to win settlements big
enough to rock the industry, lawyers said.

"The potential claims dwarf even the enormous resources of
the investment banks," said Chris Bebel, a partner at the
Houston securities law firm of Shepherd Smith & Bebel. "If
the plaintiff firms prevail, they're probably going to extract
a handsome settlement. That could force a couple of these
investment banks into merger negotiations."

Legal sources said the law firm of Milberg Weiss Bershad
Hynes & Lerach was expected to annouce a massive lawsuit
against the banks next week on behalf of the University of
California Regents.

Milberg Weiss is already lead plaintiff in litigation against
Enron.

The suit itself was expected to be filed in early April, the
sources said.

Spokespersons for JP Morgan, Credit Suisse, and other
banks declined to comment. Privately, bankers have scoffed
at the plaintiffs' attorneys, who also have threatened
Enron-linked law firms, accounting firms, and even public
relations firms.

As it has become clear that bankrupt Enron and struggling
Andersen may have little to offer legal claimants, plaintiffs'
attorneys have been sizing up ways to tap others' riches.

"Plaintiffs are getting very interested in theories of
secondary liability," said Bill Lerach, partner at Milberg.

Speaking at a legal conference here, Lerach said the Enron
action was becoming difficult for plaintiffs because of the
dwindling resources of Enron and Andersen.

Dozens of shareholder lawsuits were filed against
Houston-based Enron after its stunning collapse last fall,
which wiped out billions of dollars in investor equity.
Andersen, the Chicago-based Big Five accounting firm, has
also been sued by shareholders alleging they were duped.

Enron filed the largest bankruptcy in U.S. history on Dec. 2,
putting legal claims against the company on the back burner.
Andersen was indicted by federal authorities on March 14 on
a charge of obstruction of justice, accelerating a client
exodus and raising doubts about the firm's future.

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