Merrill Lynch paying $29.5 million to settle an Enron suit
Merrill Lynch & Co. on Thursday agreed to pay Enron Corp. $29.5 million to settle its portion of a lawsuit filed against 10 banks accused of failing to prevent the energy company's collapse.
The New York-based securities firm _ which did not admit or deny wrongdoing _ said it settled the so-called MegaClaims lawsuit to avoid the costs and uncertainties of more litigation.
Merrill Lynch also agreed to give up collection of $73.7 million in claims against what's left of Enron but could receive about $10 million in other claims that were outside the settlement, according to an Enron spokeswoman.
The settlement is smaller than the $80 million that Merrill Lynch paid the Securities and Exchange Commission in 2003 to settle civil charges that the firm participated in Enron's sham sale of floating power plants, which made it appear that Enron had met earnings targets in 1999.
Also in 2003, Merrill Lynch avoided criminal prosecution by admitting that some employees may have broken the law with questionable year-end deals. Four former Merrill executives were convicted of conspiracy and fraud in 2004 for their roles in the power plant deal, and were sentenced to prison terms up to four years. Three of those four have since been released on bond pending appeals.
Thursday's settlement must be approved by a U.S. Bankruptcy Court in New York, and the payment would go to creditors of Enron, which is liquidating its remaining operations. Enron filed for bankruptcy in December 2001 amid questions about its accounting and financial state, triggering a flurry of lawsuits by the company and its shareholders against a number of banks.
Last year, JPMorgan Chase & Co. agreed to pay Enron $350 million, Canadian Imperial Bank of Commerce agreed to pay $250 million, and Toronto Dominion Bank agreed to pay $70 million in MegaClaims cases. In May, Credit Suisse Securities LLC agreed to pay $90 million.
Enron said remaining cases in the litigation involve Citigroup Inc., Deutsche Bank AG, Barclays PLC, and Fleet National Bank.
Some of the same banks involved in the MegaClaims cases have agreed to pay large sums to settle a class-action lawsuit filed by Enron investors. JPMorgan agreed last year to pay $2.2 billion, Canadian Imperial agreed to a $2.4 billion settlement, and Citigroup reached a $2 billion settlement. Former Enron auditor Andersen Worldwide S.C., former Enron directors and others paid smaller amounts.
Copyright 2006 The Associated Press. // FAIR USE--Education of teevee toob-fed unthinking parrots
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