Canadian Imperial Bank of Commerce announced today that it has agreed to pay $2.4 billion to settle the class action securities litigation against the bank arising out of the demise of Enron Corp. in late 2001. The CIBC settlement is the largest settlement to date in connection with the Enron securities class action (previous settlements are here, here, here, here and here), and pushes the aggregate amount of such settlements a billion over the $6 billion benchmark established earlier this year in connection with the settlements in the WorldCom class action litigation. Here is the Chronicle article on the settlement.
William Lerach — the lead plaintiffs’ lawyer in the Enron class action — publicly stated in connection with the CIBC settlement that his goal is to have each settling financial institution pay more than previous settlements. That piece of information could not have brought warm and fuzzy feelings to the remaining financial institution defendants in the Enron securities fraud class action, which include Credit Suisse First Boston, Merrill Lynch & Co., Barclays PLC, Toronto Dominion Bank, Royal Bank of Canada, Royal Bank of Scotland, and Deutsche Bank AG.

CIBC previously paid a paltry $80 million to settle SEC civil charges in a December 2003 settlement in which the SEC alleged that CIBC had aided and abetted fraud by entering into about 35 structured finance transactions with Enron between June 1998 and October 2001. Although the SEC alleged that the transactions allowed Enron to boost earnings and mask debt on its financial statements, that settlement was widely viewed in the legal community as a nuisance settlement. CIBC did not admit any wrongdoing in connection with that settlement.
The Enron securities fraud class action generally accuses a group of Wall Street banks and securities firms of misleading investors by facilitating Enron transactions that removed billions of dollars of debt that allegedly should have been reported on the firm’s public financial statements. Mr. Lerach has publicly stated that the plaintiffs are seeking more than $40 billion in damages in the case, but the pace and size of settlements to date indicates that the total amount recovered will be far south of that amount. Still, each additional settlement from here on out will increase the new record for the highest amount recovered in a U.S. securities fraud class action against financial institutions.