After Enron's house of cards collapsed, many investment banks closed ranks with their legal teams, including three of Canada's major banks: CIBC, Royal Bank, and TD Canada Trust. First to succumb to the pressure was CIBC, settling things out of court to a tune of $2.4 billion, which forced the bank last year to report net losses for the first time in who knows how long. However, a recent decision by a Texas judge that let Barclays Bank off the hook is making CIBC executives wonder if they admitted their mea culpa too early in the game.

Unlike CIBC, Royal and TD are still fighting $40.0 billion worth of class action suits filed by Enron's former shareholders. Just in case court rulings don't go their way, both have set aside about $800.0 million.

Barclays was the first bank from Enron's close circle of investors slated to go to the chopping block. In July, however, the Honorable Judge Melinda Harmon ruled that claims against Barclays were unfounded, completely exonerating the bank of all charges.

Apparently, Judge Harmon found that Barclays, although it may appear guilty in the spirit of the law, it is not so in the letter of the law. The reason is simple: Currently, the case law does not recognize "aiding and abetting" of the so-called white collar crime as a private right of action.

Not surprisingly, after the Barclays decision, Royal Bank and TD Canada Trust have applied to have all charges against them dismissed, since both banks engaged in similar types of transactions as Barclays.

In defense of Judge Harmon, she said that Barclays was only one bank among the 11 banks against which Enron-related charges were levied. Meaning, each case will be awarded individual attention and each case will be reviewed within its own context. So, nothing is set in stone. But, Barclays' decision has certainly set the overall tone, as well as precedent.

While CIBC's decision to settle out of court may now seem to have been done in haste, there is a reason for that. The bank was heavily involved in Enron's shady deals, and no one wanted to gamble with all kinds of information that could have surfaced about the bank's conduct and practices. Plus, Enron was a "hot potato" that no one wanted to be associated with. At the time, the bank believed settling for $2.4 billion was the lesser of two evils.

Just to put things in perspective as to how things with class action lawsuits can go wrong, an $8.0 million lawsuit against a funeral operator Loewen Group Inc. ended up with a $500.0 million settlement, eventually bankrupting the company. This is most likely why several of the banks implicated in Enron's scandal have already settled things out of court. So far, Enron's shareholders won about $7.0 billion in settlements, out of which $2.4 billion were paid by CIBC.

I'm sure CIBC executives are now second-guessing their decision to settle. But, I find it unconscionable that banks doing deals with Enron are even trying to fight Enron's shareholders. I've worked with many investment bankers at CIBC, TD, and Royal Bank, and let me tell you, these guys are truly smart, which makes their proclamations of innocence absurd. I'm sure they knew they were walking a very fine line, if they didn't cross it.

The whole thing about new corporate governance in the wake of corporate scandals such as Enron is recognizing and practicing both the letter and the spirit of law. Hiding behind loopholes is detrimental to normal functioning of capital markets. So, CIBC's decision to pay, even if there was an ulterior motive behind it, seems to be the only right and fair thing to do.