Merrill Lynch Will Pay $80M to Settle Enron CaseFeb 21, 2003 | USA Today
Merrill Lynch executives said Thursday that the firm will pay $80 million to settle a Securities and Exchange Commission investigation of its questionable financial deals with energy trader Enron in 1999.
''We're entering into a settlement to put this matter behind us,'' Merrill spokesman Bill Haldin says.
The tentative settlement, if approved by SEC commissioners, will end the agency's investigation into several energy trades between Merrill and Enron, plus a $7 million investment made by Merrill into three Enron power-generating barges off Nigeria's coast.
Senior Merrill bankers were concerned the firm might be criminally indicted for their dealings with Enron, particularly the Nigerian barge transaction, according to people knowledgeable about the matter.
Without admitting or denying illegal acts, the nation's No. 1 brokerage firm said it will pay the SEC $80 million in disgorgement, penalties and interest.
As part of the settlement, the brokerage firm also agreed to an SEC injunction barring the firm from future violations of federal securities laws.
Merrill will take an $80 million charge against its 2002 fourth-quarter results.
The Justice Department (news - web sites) also looked at Merrill's deals with Enron, but told the Wall Street firm last summer that it was not a target of a criminal investigation, according to Merrill's SEC filings.
Last spring, congressional lawmakers -- looking at the role of several Wall Street banks in the long-running Enron scandal -- criticized the questionable ties between Merrill and Enron.
They blasted the barge deal, which involved former Enron chief financial officer Andrew Fastow. The deal illegally boosted Enron profits, according to congressional investigators and a federal indictment of Fastow.
Fastow is facing a federal trial in Houston on criminal charges related to the fall of Enron.