Lead Plaintiff's Opposition to CSFB MSJ 11/13/06 - The ENRON Fraud

TABLE OF CONTENTS
Page
I. INTRODUCTION ...............................................................................................................1
A. CSFB Transactions ..................................................................................................2
B. CSFB’s Actions Subject It to Primary Liability ......................................................4
C. CSFB Acted with Scienter.......................................................................................6
D. Red Herrings ............................................................................................................8
1. CSFB’s Laurence Nath ................................................................................8
2. LJM2 and New Power Allegations............................................................12
E. Summary Description of Lead Plaintiff’s Legal Claims Against CSFB ...............15
II.
ARGUMENT.....................................................................................................................16
A. The Summary Judgment Standard.........................................................................16
B. There Is a Genuine Issue of Material Fact Concerning Whether CSFB
Violated Rule 10b-5(a) and (c) ..............................................................................19
1. The Standard for Primary Scheme Liability Under Rule 10b-5(a)
and (c) ........................................................................................................19
2. CSFB’s Engagement in and Structuring of the Fraudulent
Transactions Subjects It to Primary Liability ............................................34
a. Related-Party Transactions ............................................................35
(1) LJM1 – The Illusory Rhythms “Hedge”............................35
(2) LJM1 – CSFB’s Bridge Loan Masked as an
“Investment” ......................................................................57
b. Prepays...........................................................................................62
(1) Year 2000 Fake Oil “Prepay” Transaction ........................62
(2) Year 2001 Fake Oil “Prepay” Transaction ........................91
c. FAS 125/140 Transactions.............................................................96
(1) Iguana: Fake “Sale” of Assets............................................96
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