‘Not so fast’ was the overwhelming message given Friday as the federal judge handling the Enron Corp. securities lawsuit ruled against several major financial institutions, law firms and Arthur Andersen, denying most defendants’ motions to be dismissed from the case. With the move, Enron shareholders will be able to begin the process of depositions and evidence discovery in the case, according to the University of California, which is lead plaintiff in the shareholders’ class action suit against the one-time energy giant.

In addition, a separate ruling by Federal Judge Melinda Harmon in the U. S. District Court for the Southern District Court of Texas in Houston ordered that documents provided by defendants during discovery would not be sealed from the public.

“Today’s decision by Judge Harmon is a major victory for Enron’s investors,” said James E. Holst, general counsel for the University of California, “We are gratified by the obvious care with which Judge Harmon has made her decision and will be studying the opinion in detail over the coming days. We look forward to aggressively pursuing the case on behalf of the class.”

The lawsuit was filed in April with the University of California, as lead plaintiff. The consolidated complaint added nine financial institutions, two law firms and other new individual defendants to a list that already included 29 current and former Enron executives and the accounting firm of Arthur Andersen LLP. Harmon began reviewing defendants’ motions to be dismissed from this complaint over the summer.

In her 306-page ruling, Harmon denied in their entirety the motions of J.P. Morgan Chase, Citigroup, Credit Suisse First Boston, Canadian Imperial Bank of Commerce and Barclays Bank as well as those of Enron’s accountants, Arthur Andersen LLP, and Enron’s corporate legal counsel, Vincent & Elkins.

Holst noted that Merrill Lynch’s motion was also denied, provided that plaintiffs supplement their complaint as indicated by the court. The motions by Bank America and Lehman Brothers were received a little better as the companies were successful in having their fraud claims dismissed. However, the plaintiffs’ claims against the two entities of liability under Section 11 of the 1933 Securities Act were allowed to proceed. Harmon dismissed the claims against Deutsche Bank, and Kirkland & Ellis’ motion was granted.

“This decision confirms the validity of our legal claims against the major defendants, and leaves in the case defendants with resources to pay substantial compensation to the class,” said William Lerach, senior partner at Milberg, Weiss, Bershad, Hynes & Lerach, the university’s lead counsel. “It also should open the way for discovery, which has been stayed pending the decision, to commence. We will review the text of the decision over the coming days and provide additional details on the court’s analysis as appropriate. We are also pleased that the court has rejected the defendants’ attempts to have the evidence produced during the lawsuit kept secret.”

Under the 485-page amended complaint, the plaintiffs named the nine financial institutions as key players in a series of fraudulent transactions that ultimately cost shareholders more than $25 billion. The university said two law firms were also added to the list of Enron defendants because of their significant and essential involvement in the fraud — Enron’s Houston-based corporate counsel Vinson & Elkins, as well as Chicago-based Kirkland & Ellis, which Enron used to represent a number of so-called “special purpose entities,” the university said.

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