August 16, 2005
JPMorgan and Toronto Dominion Settle Enron "Megaclaims" Lawsuit: Is it Enough?
The Associated Press reported today that JPMorgan Chase & Co. (NYSE: JPM) and Toronto Dominion Bank (NYSE: TD) agreed to pay at least $420 million to settle their parts of the "Megaclaims" lawsuit filed by Enron against 10 banks, alleging they "aided and abetted fraud" and could have prevented the energy trader's demise. JPM agreed to pay $350 million in cash to Enron Corp and TD agreed to pay $70 million, also both banks agreed to forgo certain claims in Enron's bankruptcy proceedings and agreed to pay more money to Enron for the ability to pursue others.
JPM said that it does not expect its settlement, which is subject to approval by the bankruptcy court, to have a "material adverse impact" on earnings, but JPM has now agreed to pay nearly $2.6 billion so far to settle claims involved with its involvement with Enron.
In total, Enron said the settlements announced today bring payments in the Megaclaims case to $735 million and banks have agreed to forgo or pay to pursue claims valued at around $3 billion.
These raw numbers and the tepid statements of the JPM public relations department are not very satisfying. One yearns for a judge, in approving the settlement, to ask JP Morgan: "Has the bank taken steps to make sure this will not happen again?"
Financial institutions which still have Megaclaims exposure include: Barclays PLC, Citigroup Inc., Credit Suisse First Boston Inc., Deutshe Bank AG, and Merrill Lynch & Co.
August 16, 2005 | Permalink
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