An investment fund that played a central role in
collapse is considering suing
and other professional services firms it had used as advisers.
The LJM2 limited partnership last month hired a law firm to investigate the possibility of pursuing litigation against Merrill Lynch, the accounting firm
and two leading law firms --
Kirkland & Ellis
Dechert Price & Rhodes
LJM2 is the $390 million partnership set up in 1999 by Andrew Fastow to help Enron move ailing assets off its balance sheet and inflate the company's revenue. A number of transactions involving LJM2 are the subject of the pending criminal case against Fastow and other former Enron officials.
Last summer LJM2 filed for bankruptcy and is in the process of distributing its remaining assets to some of the fund's 52 investors, which include
J.P. Morgan Chase
, the Arkansas Teacher Retirement System and the MacArthur Foundation. A lawsuit against Merrill Lynch and the other firms would seek to recoup more money for LJM2's investors.
Merrill Lynch served as the placement agent for LJM2 and helped pitch the fund to a wide range of financial institutions and wealthy investors. Earlier this year, the nation's biggest brokerage paid an $80 million fine to settle a
Securities and Exchange Commission
investigation into the firm's part in Enron's shady financial transactions.
"We are fulfilling our fiduciary role to help us determine whether we have any valid legal claims," said Bettina Whyte, a principal in Alix Partners, a corporate restructuring firm that assumed management control of LJM2 in the aftermath of the Enron scandal.
Additionally, LJM2 has authorized its lawyers to consider whether it has any pending claims against
Credit Suisse First Boston
, the investment-banking arm of
Credit Suisse Group
. A group of CSFB investment bankers helped structure many of the Enron-related deals LJM2 was an investor in
Both Merrill Lynch and CSFB were original investors in the LJM2 fund.