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

109. On August 18, 2003, The Deutsche Bank Entities filed a motion to dismiss the FACC
(Docket No. 1620), which argued that, with regard to the Exchange Act claims, the FACC failed to
adequately plead scienter, reliance and loss causation, and that certain of the claims were timebarred.
On September 25, 2003, Lead Counsel filed Plaintiff’s Memorandum of Law in Opposition
to the Deutsche Bank Defendants’ Motion to Dismiss (Docket No. 1707) (and on December 11,
2003 filed Plaintiff’s Response to the Deutsche Bank Entities’ Notice of Supplemental Authority in
Support of Their Motion to Dismiss the First Amended Consolidated Complaint, which concerned
Deutsche Bank’s reliance on the Final Report of Neal Batson, Court-Appointed Examiner (Docket
No. 1887)). In its opposition, Lead Plaintiff argued that the FACC adequately pled reliance under
the fraud-on-the-market theory, that the allegations of the defendants’ structured tax deals with
Enron gave a false picture of Enron’s finances which inflated the price of its securities, and that the
defendants issued analyst reports concerning Enron which contained false and misleading
statements. Lead Plaintiff contended also that claims concerning the tax deals were not time-barred.
In the same motion, Deutsche Bank AG and Deutsche Bank Securities, Inc. argued for dismissal
because, with regard to the claims under the Securities Act of 1933 (“Securities Act”), the FACC
failed to identify false or misleading statements in the offering memoranda, and no action was
available regarding private placements. Lead Plaintiff countered that the offerings in question were
public, not private. The Court, although it agreed with Lead Plaintiff that it had sufficiently pled
reliance and loss causation, nevertheless dismissed Lead Plaintiff’s Exchange Act claims, because
claims concerning all but one of the tax deals were time-barred. As to the Securities Act claims, the
Court found that factual issues required resolution before it could rule whether the challenged
offerings were actionable as public, and accordingly denied the motion to dismiss these claims. See
3/29/04 Memorandum and Order re Merrill Lynch and Deutsche Bank Entities (Docket No. 2036) at
91.
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