| WASHINGTON, June 11
WASHINGTON, June 11 The Bush administration is
unlikely to support shareholders in a U.S. Supreme Court appeal
that aims to hold other companies and investment banks
accountable when their actions aid corporations in fraud, a
class action law firm said on Monday.
Dan Newman, a spokesman for the firm representing Enron
shareholders, Lerach Coughlin, said the Securities and Exchange
Commission wrote a draft legal brief supporting shareholder
plaintiffs in the appeal that is relevant to Enron's 2001
However, Newman said Solicitor General Paul Clement, who
acts as the U.S. government's chief lawyer in Supreme Court
appeals, was unlikely to support the regulator's view.
A spokesman for the Justice Department said he could not
comment on matters of pending litigation.
In the appeal case before the Supreme Court, shareholders
of Charter Communications Inc. (CHTR.O) sued Scientific Atlanta
and Motorola Inc. MOT.N, accusing them of aiding a scheme to
inflate Charter revenues in 2000. A lower court dismissed the
case, saying that companies were not liable because they were
not primary players in the alleged fraud.
Enron shareholders are closely watching the case because it
could affect their own attempt to sue banks, including Merrill
Lynch & Co. MER.N, for helping put together financing
transactions for Enron before its collapse.
Legal briefs supporting the plaintiffs in the Charter case
are due at the Supreme Court by midnight on Monday.
Newman said he and other investor advocates started hearing
late last week that the solicitor general would not support the
The Treasury Department also sent a letter to the solicitor
general, but it expressed concern that a ruling supporting the
plaintiffs could be harmful to the overall U.S. economy.
"Treasury believes uncertainty related to primary liability
for third parties could adversely affect the competitiveness of
... America's financial markets by posing unknown risks for
entities that do a broad range of business with public
companies," spokeswoman Jennifer Zuccarelli wrote in an
An SEC spokesman declined to comment.
Newman said if the solicitor general does not make a filing
in the case on Monday, the U.S. government would have another
30 days either to file a legal brief in support of the
defendants or choose not to make any statement on the case.