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Judge Nixes Enron Suit Against JPMorgan Chase

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One of the more creative Enron lawsuits was dismissed by a Manhattan federal judge yesterday. The plaintiffs were shareholders of JPMorgan Chase who said they bought the stock because of the company's reputation for integrity and financial discipline but had been deceived because JPMorgan Chase was helping Enron, a major client. You can see how free-wheeling this kind of liability could get--and how it would really amount to a requirement that banks police all their clients for fraud.
Ever wonder how those science fiction worlds where the banks run their own police forces get started? Well, now we know. And we're glad we don't yet have to welcome our new banking police masters. Yet.
We will admit that there is some evil part of our brains that is sorry to see this lawsuit go. It's the part that is going to miss the spectacle of JPMorgan arguing that it had not overstated its own reputation for integrity. They could have done this in two ways. First, by arguing that they fully deserved a high reputation, but our lawyer friends tell us that this would have been almost impossible to prove. Second, by arguing that their reputation wasn't really all that. You know, the "look, bitch, you knew I was a snake when you picked me up" defense. This also might not have been the way JP Morgan wanted to go, either. But it sure would have been fun to watch them squirm between the unprovable and the unpalatable.
Enron Class-Action Suit Is Dismissed
[Reuters in NYT]