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

if CSFB’s conduct here presents the requisite deception, factual variations from the cases should
not insulate it from liability.
Second, conduct which yields deception only indirectly is nevertheless actionable under
Rule 10b-5(a) and (c). 38
Third, in determining whether conduct or transactions disclose the
requisite deception, this Court should construe all reasonable inferences to that effect in Lead
Plaintiff’s favor. 39
Finally, as demonstrated below, under these authorities and all of the Court’s relevant
Orders, Lead Plaintiff’s evidence concerning CSFB’s role in the Enron fraud create a genuine
issue of material fact as to whether CSFB is liable under Rule 10b-5(a) and (c).
2. CSFB’s Engagement in and Structuring of the Fraudulent
Transactions Subjects It to Primary Liability
Discovery in this case has produced exceedingly powerful evidence establishing that
CSFB played a major role in the Enron scheme, engaging in transactions which had the purpose
and effect of creating the false appearance of fact. CSFB’s own conduct in these transactions
constituted manipulative and deceptive acts in furtherance of that scheme.
38
As the SEC stated: “We do not believe that direct conduct should be a requirement for
primary scheme liability. Section 10(b) and Rule 10b-5 expressly cover ‘indirect’ conduct. Thus,
a defendant should be primarily liable where he either directly or indirectly engages in a
manipulative or deceptive act as part of a scheme to defraud.” SEC Brief (Ex. 3) at 18 n.4.
39
See Parmalat I, 376 F. Supp. 2d at 483 (“The Court accepts the allegation of a guarantee
because all reasonable inferences are to be drawn in plaintiffs’ favor at this stage.); id. at 504
n.160 (“the Court is obliged to draw from the complaint all reasonable inferences in the
plaintiffs’ favor and therefore assumes for present purposes that Citigroup securitized worthless
invoices”); id. at 505 (“The conversion right thus may well have played a role similar to that of
the invoices in the BNL arrangement. The Court is obligated so to assume at this stage, where
reasonable inferences are to be drawn in the plaintiffs’ favor.”). While Judge Kaplan operated
under the observation that “all reasonable inferences are to be drawn in plaintiffs’ favor” on a
motion to dismiss (id. at 483), similarly on summary judgment the court will “draw all
reasonable inferences in favor of the nonmoving party.” Flock, 319 F.3d at 236.
- 34 -