Reuters reported that JPMorgan Chase & Co. and Toronto-Dominion Bank announced they would pay a combined $450 million to settle allegations they helped Enron commit fraud.
JPMorgan is slated to pay $350 million while Toronto-Dominion, Canada’s second-largest bank will pay $70 million, plus $60 million for claims it had transferred to third parties, according to the news report.
JPMorgan’s payment is on top of the $2.2 billion it agreed in June to pay to resolve an investor class-action lawsuit over Enron’s collapse (See AL Fund Settles Enron Suit for $49 Million ). Toronto-Dominion has not settled its part of that lawsuit, but added $300 million to its litigation reserve.
Enron emerged from Chapter 11 protection last November and now exists to liquidate assets and pay debts. The company went into US Bankruptcy Court in December 2001. Ten banks were accused of helping Enron hide debt and inflate results. Enron’s bankruptcy is the second largest in US history, after WorldCom Inc.
Under other settlements in the MegaClaims litigation, Canadian Imperial Bank of Commerce will pay $250 million, Royal Bank of Scotland Group PLC $41.8 million, and Royal Bank of Canada $25 million.
Banks that haven’t settled include Barclays PLC (Citigroup Inc, Credit Suisse First Boston, Deutsche Bank AG and Merrill Lynch.
In the investor lawsuit, CIBC agreed to pay $2.4 billion, and Citigroup $2 billion (See CIBC Agrees to $2.4B Enron Settlement ). The University of California, the lead plaintiff in that case, has recovered $7 billion from several banks on behalf of Enron investors.