Washington (March 18, 2003) -- The Securities and Exchange Commission charged Merrill Lynch & Co. Inc. and four of its former senior executives with aiding and abetting Enron Corp.'s securities fraud in a Houston District Court this week.

 

Without admitting or denying the allegations, Merrill Lynch agreed to pay a total of $80 million dollars to settle the matter. The firm also agreed to the entry of a permanent anti-fraud injunction prohibiting future violations of the federal securities laws.

 

The Commission's complaint alleged that Merrill Lynch and its former executives helped Enron manipulate earnings through two fraudulent year-end deals in 1999 designed to make the energy company’s financials ook better than they were. The SEC said Enron used the transactions to add approximately $60 million to its fourth quarter of 1999 income (improving net income from $199 million to $259 million or 33 percent) and to increase its full year 1999 earnings per share from $1.09 to $1.17.

 

The SEC said the four former Merrill Lynch executives named in the complaint, Robert S. Furst, Schuyler M. Tilney, Daniel H. Bayly and Thomas W. Davis, are contesting the matter.

 

The SEC said one of the deals involved an asset-parking arrangement through which Merrill Lynch bought an interest in certain Nigerian barges from Enron with the understanding that Enron would arrange for the sale of this interest by Merrill Lynch within six months at a specified rate of return. In the second transaction, Merrill Lynch and Enron entered into two energy options - one physical and one financial - that Merrill Lynch knew had the purpose and effect of inflating Enron's income by approximately $50 million.

 

- Electronic Accountant Newswire Staff

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