The Bush administration has opted not to second the SEC's supportive position regarding a pending class action lawsuit that has former shareholders of defunct energy trader, Enron, pursing several investment banks for damages arising from their role in obscuring Enron's house of cards.

The SEC had asked for a brief of support to be filed by the Justice Department's Solicitor General Paul Clement. As of Monday's deadline, no such amicus brief had been filed by the DOJ and no support, at this point is expected. Not entirely surprising given the cozy relationship between Enron and the current administration.

In fact President Bush (who The Daily Caveat usually avoids discussing) chimed in with his own comments on the case, which gave a hint which way the winds were blowing at DOJ. The President decried the notion of unnecessary lawsuits, which we can assume to include those brought by Bill Lerach.

The SEC had voted at a 2 to 3 margin to support the suit, with Bush appointee, SEC Commissioner Christopher Cox siding with two democrats in support of the case. The U.S. treasury has taken the opposite stance, arguing that the case could set a precedent that would harm U.S. Competitiveness.

For more on the conflict between the Justice Department and the SEC, check out this article from the China Standard.

-- MDT

Labels: accounting fraud, Bush administration, class action, Enron, investment banks, Paul Clement, Stoneridge