Declaration Of Helen J. Hodges In Support Of Lead Counsel's ...

83. On May 3, 2002, the Preferred Purchaser Plaintiffs filed a motion to have certain
claims appended to Lead Plaintiff’s complaint (Docket No. 682). On July 5, 2002, Lead Plaintiff
filed a response (Docket No. 963), which argued against adding the Preferred Purchasers’ claims to
the Newby complaint, based on the statue of limitations, the inapplicability of the relation-back
doctrine, the statute of repose, and because not all claims and defendants were included. The Court
agreed with the reasoning of Lead Plaintiff, and ordered that the Preferred Purchasers’ claims should
not be pursued in the Newby complaint. See 8/5/02 Order re Multiple Motions re Consolidation,
Clarification and Scheduling (Docket No. 983) at 6.
84. In May of 2002, the bank defendants and others filed motions to dismiss the
Consolidated Complaint, to which Lead Counsel filed oppositions. The parties argued, and the
Court ruled, as follows:
(a)
Merrill Lynch (Docket No. 667) argued for dismissal because one of Lead
Plaintiff’s claims was time-barred; the complaint failed to specify analyst statements claimed to the
fraudulent; the complaint failed to adequately plead scienter or a primary violation of the securities
laws. On June 10, 2002, Lead Plaintiff filed a 122-page opposition to Merrill Lynch’s motion to
dismiss (Docket No. 846), arguing that Merrill Lynch faced liability because it sold Enron and
Enron-related securities to investors via false Registration Statements; issued false analyst reports on
Enron; employed acts, contrivances and deceptive devices to deceive Enron investors; and
participated in a scheme to defraud purchasers of Enron’s securities. Lead Plaintiff highlighted its
allegations that Merrill Lynch funded Enron’s LJM2 partnership and purported to “purchase” three
Enron electricity barges in Nigeria, when, in fact, it had insisted on a secret repurchase promise and
no loss guarantee. Lead Plaintiff also argued that the complaint properly pled scienter as to Merrill
Lynch. The Court ruled that Lead Plaintiff’s Consolidated Complaint stated a claim against this
defendant with its allegations of Merrill Lynch’s involvement in the Nigerian Barges and Enron
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