Bill Lerach vowed a swift appeal
to the U.S. Supreme Court.
The Fifth Circuit's decertification order hinges on its conclusion that neither the Affiliated Ute nor the Basic, Inc. v. Levinson fraud-on-the-market presumption of reliance applies to the facts of the case. Delving into the merits of the fraud by silence claims, the court held that the district court arrived at "an erroneous understanding of securities law" and that the mistake led to the further -- and fatal -- error of allowing the class the benefit of presuming that all purchasers of Enron relied on the investment banks' failure to disclose their deceptive scheme. Two judges said the decision sounded the death knell for class certification; the third panel member thought otherwise. Regents of the University of California v. Credit Suisse First Boston (USA), Inc., No. 06-20856 (5th Cir. Mar. 19, 2007).