Merrill Lynch & Co. will pay $30 million to end litigation centering on energy trader Enron Corp.'s historic bankruptcy. As part of the settlement, the securities firm also agreed to drop more than $73 million in counter claims against Enron.
In a statement, Merrill said that it had neither admitted nor denied liability or wrongdoing, and that both parties agreed to the settlement in order to avoid the "costs and uncertainties" of further legal proceedings. As part of the agreement, Merrill will still be able to present about $10 million in claims outside the settlement to the federal court supervising Enron's bankruptcy.
Enron has been selling assets and pursuing lawsuits since its December 2001 failure. Known as the "MegaClaims" litigation, Enron sued more than 10 financial institutions in 2003 for allegedly aiding the massive accounting fraud that lead to the company's downfall.
Over the past year, Credit Suisse settled for $90 million, Lehman Brothers Holdings Inc. agreed to pay nearly $70 million, and Canadian Imperial Bank of Commerce, or CIBC, agreed to pay $250 million. Enron hasn't yet settled related claims against Citigroup Inc., Deutsche Bank AG, Barclays PLC, and Fleet National Bank, now owned by Bank of America Corp.
Many of the same banks have already paid sums totaling billions to settle a class-action lawsuit filed by Enron investors.
A bankruptcy court in New York must still approve the Merrill deal. The firm already paid $80 million in 2003 to settle civil charges from the Securities and Exchange Commission over a sham sale of power plants in 1999. Four former Merrill executives were convicted of conspiracy and fraud in 2004 for their roles in the deal, and were sentenced to prison terms of up to four years.
Previously on WebCPA:
Enron's Kenneth Lay Dead at 64 (July 6, 2006)
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access