This NY Times article reports on yesterday’s announcement that Bank of America Corp. is the first bank defendant to settle claims against it in the Enron Corp. class-action lawsuit alleging that some of the country’s top banks and securities firms and two law firms participated in a scheme with Enron’s top executives to deceive shareholders.
B of A tentatively agreed to pay $69 million to investors who suffered billions of dollars in losses as a result of Enron’s collapse during late 2001. The lead plaintiff in the lawsuit — the Regents of the University of California — lost nearly $150 million alone in regard to its investment in Enron.
According to a prepared statement, B of A denied that it “violated any law,” in connection with Enron and stated that it was making the settlement payment “solely to eliminate the uncertainties, expense and distraction of further protracted litigation.”
Inasmuch as B of A was a relatively small-scale player in Enron’s financial dealings and was not accused of fraud in the lawsuit, the settlement agreement indicates that other banks and securities firms that were more involved with Enron will have to dole out much more to settle the litigation claims against them. Financial firms still involved in the lawsuit include Merrill Lynch & Co.; Credit Suisse First Boston; Deutsche Bank AG; Canadian Imperial Bank of Commerce; Barclays PLC; Toronto-Dominion Bank; and Royal Bank of Scotland PLC. So far, the only other firm to settle in the lawsuit is Andersen Worldwide SC, the Swiss organization that oversees Andersen Worldwide’s independent partnerships, which settled in 2002 for $40 million.