New York, March 30, 2007 - Shearman & Sterling LLP has won a major legal victory for its client Merrill Lynch in the Enron securities class action litigation. On March 19, 2007, the United States Court of Appeals for the Fifth Circuit issued a decision reversing the trial court's order certifying a class of Enron investors against Merrill Lynch. The case is considered to be the largest securities class action in U.S. history and was scheduled for a jury trial on April 16, 2007.

The plaintiffs sought tens of billions of dollars in damages from the defendants as alleged participants in a purported scheme to defraud Enron investors. On November 1, 2006, the Court of Appeals granted Merrill Lynch's request for interlocutory review of the trial court's class certification order. The appeal presented, among other things, the issue of "scheme" liability under SEC Rule 10b-5(a) and (c). Shearman & Sterling argued successfully that the certified class could not proceed with its claims against Merrill Lynch because Merrill Lynch's alleged conduct did not satisfy the requirements for primary liability under Section 10(b) of the Securities Exchange Act of 1934. The Court of Appeals also agreed with Shearman & Sterling's argument that class-wide reliance could not be shown as to Merrill Lynch conduct. As a result of the Court of Appeals' ruling decertifying the class against Merrill Lynch and other defendants, trial has been stayed pending plaintiffs' efforts to seek review of the Court of Appeals' decision in the United States Supreme Court.

The Shearman & Sterling team was led by litigation partners Stuart J. Baskin (NY-LT), Herbert S. Washer (NY-LT), and Adam S. Hakki (NY-LT). Associates working on the case included Kirsten Nelson (NY-LT), Seth Kean (NY-LT), Kristen Fitzmaurice (NY-LT), Jeffrey Resetarits (NY-LT), Christopher Fenton (NY-LT), Daniel Lewis (NY-LT), Monique Gaylor (NY-LT), Sami Rashid (NY-LT), Jaclyn Barnao (NY-LT), Colleen Carey (NY-LT), and Brian McElroy (NY-LT).