Citibank and J.P. Morgan Chase Agree to Multi Million Dollar Enron Settlement
The demise of energy giant Enron continues to ricochet through financial circles with Citicorp and J.P. Morgan Chase agreeing this week to pay a combined $308 million to settle Enron-related charges.
The settlement ends a $8.3 billion probe into in questionable loans made to Enron by Citibank, the nation’s largest bank (by assets), and J.P. Morgan Chase, the second largest.
Investigations by the SEC and Manhattan District Attorney Robert Morgenthau had revealed an elaborate loan scheme that was so complicated, the loans were perceived to be complex commodities transactions, adding to the billions in debt being accrued by Enron.
Stephen M. Cutler, director of the Securities and Exchange Commission’s enforcement division, said the settlement shows that large financial institutions "may not take the view they are not responsible for financial disclosure made by others. They may not hide behind accountants and lawyers. They may not say, ‘Everybody does it.’ "
The fines have already been wired to court supervised accounts, with the money eventually to be distributed to the many victims of Enron’s fraud.
This latest $308 million joins $80 million paid by Merrill Lynch & Co. earlier this year to settle SEC charges that Merrill and four of its executives helped Enron cook its books.
Despite settling the charges, neither company admitted to wrongdoing. In a letter to Morgenthau, Mark J. Shapiro, vice chairman of J.P. Morgan Chase, said, "We have made mistakes. We cannot undo what has been done, but we can express genuine regret and learn from the past."
Over the last year, both have put new policies in place in an effort to prevent this from happening again.