Updated from 5:39 p.m. EST

Kenneth Lay and Jeffrey Skilling, the former top executives at

Enron

, breached their fiduciary duty by failing to oversee the company's special-purpose entities, according to a court-appointed examiner in Enron's bankruptcy proceeding.

In a lengthy report filed on Monday, Atlanta attorney Neal Batson said Skilling and Lay approved transactions that they knew had "no rational business purpose" and that they ignored red flags indicating that some officers were misusing the SPEs to disseminate misleading financial information.

The report could put pressure on federal authorities to file charges against Skilling and Lay, who have so far avoided prosecution. The

Securities and Exchange Commission

and Justice Department have both brought charges against Enron's former chief financial officer, Andrew Fastow.

Batson, who was appointed last year by a bankruptcy judge to analyze Enron's off-balance-sheet partnerships and structured finance deals, said three financial institutions --

Credit Suisse Group's

( CSR) Credit Suisse First Boston, Royal Bank of Scotland Group and Toronto-Dominion Bank -- "aided and abetted certain Enron officers who breached their fiduciary duty."

Batson concluded in a previous report that six Wall Street firms, including

Citigroup

(C) - Get Report

J.P. Morgan Chase

(JPM) - Get Report

,

Merrill Lynch

( MER) and

Canadian Imperial Bank of Commerce

, aided and abetted Enron in some of its dubious accounting schemes.

The report suggests that Lay and Skilling might have to repay loans to Enron. Between May 1999 and October 2001, Lay borrowed more than $94 million from Enron and repaid it with company stock. In May 1999, Skilling repaid $2 million with Enron stock. Batson said the repayments with company stock were "not duly authorized or approved by the Enron board under applicable corporate law."

If Enron chooses to invalidate the deals, it would return 2.13 million shares to Lay and 26,425 shares to Skilling. Both would then repay the loans plus interest.

Batson said Lay has submitted to a one-day interview while Skilling has invoked his Fifth Amendment right and has refused to provide any testimony. Both men used e-mail infrequently, and they did not retain many documents. "They produced very little relevant written material in response to the examiner's subpoenas," the report noted.

Despite the limited amount of sworn testimony, Batson concluded that the evidence is sufficient to show that Lay and Skilling breached their fiduciary duty. "The evidence shows that, as a result of their day-to-day involvement at the company, Lay and Skilling knew or should have known their subordinate officers misused SPE transactions in a manner that resulted in the dissemination of materially misleading financial information," he said.