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Merrill Lynch agrees to Enron settlement

By ASSOCIATED PRESS
Published July 7, 2006

HOUSTON - 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, an Enron spokeswoman said.

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.

[Last modified July 7, 2006, 00:59:10]