J.P. Morgan Chase & Co. and Toronto-Dominion Bank announced yesterday that they had agreed to pay about $420 million to settle their parts of the “Megaclaims” lawsuit that the Enron bankruptcy estate filed against 10 banks for allegedly aiding and abetting accounting fraud that Enron alleged prompted the company’s collapse into chapter 11 at the end of 2001. Morgan Chase will pay $350 million of the total and Toronto-Dominion the balance.
Three other banks have already settled the Megaclaims litigation, so with the most recent settlements the aggregate amount of settlements in the litigation is approaching three quarters of a billion dollars for the Enron bankruptcy estate. The settling banks have also agreed to waive claims against the Enron estate in an aggregate amount in excess of $3 billion. The five banks that remain in the Megaclaims litigation are Citigroup Inc., Credit Suisse Group’s Credit Suisse First Boston Inc., Deutsche Bank AG, Merrill Lynch & Co. and Barclays PLC.
The Megaclaims litigation is seperate from the Enron securities fraud class action case against the same banks that is pending in Houston and has already resulted in settlements in excess of $7 billion. Frankly, compared to the amounts that the settling banks have paid to date in that litigation, the amounts being paid to settle the Megaclaims litigation are practically nuisance value.