Barclays Says US Court Dismisses Enron Claims

By Reuters Posted 21 July 2006 @ 06:04 pm EET     Print     Reprint     E-Mail     Comments

LONDON (Reuters) - A U.S. court has dismissed claims against Britain's Barclays in a multi-billion dollar suit filed by Enron shareholders against banks that worked with the fallen energy giant, the lender said on Friday.

Britain's third largest bank, which worked with Enron largely in an investment banking capacity, said it had received the order from a U.S. district court on Thursday dismissing the claims in a civil suit against the group and its investment banking arm, Barclays Capital.

Enron shareholders had filed a class action suit against Enron itself, its banks and several former top executives, claiming they had lost $40 billion when Enron collapsed. They said Barclays and other banks had helped Enron hide its debts.

Barclays declined to comment on Friday on how much the suit could have cost it.

Several banks including JP Morgan Chase, Lehman Brothers and Citigroup have already reached billion dollar settlements over the suit, which is scheduled to start later this year.

Another British giant, Royal Bank of Scotland, was reported this weekend to be close to reaching a settlement with Enron investors. Three British employees of National Westminster Bank, now part of RBS, were extradited to the United States earlier this month and have pleaded not guilty to fraud charges relating to a deal with Enron.

Enron, the world's largest energy trader before its December 2001 collapse, filed for Chapter 11 protection from creditors after investors learned it used off-balance sheet deals to hide billions of dollars of debt.

The meltdown, still the second largest bankruptcy in U.S. history, sparked a series of shareholder lawsuits and criminal charges against the company and management.

Enron emerged from Chapter 11 protection in November 2004 and now exists solely to liquidate assets and pay debts.

Thursday's decision ends the so-called "Newby" class action litigation for Barclays unless successfully challenge the ruling.

Barclays shares were trading down 1.2 percent in early trade on Friday at 601 pence, giving the bank a market value of some 39 billion pounds.