This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Merrill to Pay $29.5 Million to Enron Creditors

Merrill Lynch (MER) will pay $29.5 million to settle claims arising from the Enron bankruptcy proceeding.

But the Wall Street firm is still looking at a much bigger payout down the road to settle allegations stemming from a class-action complaint filed by shareholders of the fallen energy trading firm.

Merrill Lynch says it will include the cost of the settlement in its second-quarter earnings. The investment firm is expected to announce earnings sometime in the next two weeks.

The settlement in the bankruptcy proceeding does not include any admission of wrongdoing by Merrill Lynch. That's important because the firm is still fending claims from Enron's shareholders that Merrill Lynch's investment bankers helped perpetuate the massive accounting fraud that led to the collapse of Enron.

To date, the Enron shareholders have collected nearly $7 billion from the Wall Street banks, accountants and lawyers that allegedly abetted the massive accounting fraud that led to Enron's spectacular collapse in 2001. The biggest payout has come from Canadian Imperial Bank of Commerce (BCM), which agreed to a $2.4 billion settlement last August. In earlier settlements, Citigroup (C - Get Report) and JPMorgan Chase (JPM - Get Report) shelled out $2 billion and $2.2 billion, respectively.

The shareholder lawsuit is scheduled to go to trial in the next few months against the remaining defendants, which includes Merrill, Credit Suisse (CSR) and Deutsche Bank (DB). It's doubtful Merrill will get off as cheaply in a settlement with the shareholders as it did in the bankruptcy case.

In 2003, the Wall Street giant paid an $80 million fine to the Securities and Exchange Commission to settle allegations that it arranged a series of transactions that enabled Enron to inflate its earnings. In 2004, a Texas federal jury convicted four former Merrill investment bankers on criminal charges arising from those transactions. The bankers are appealing the conviction.

Michael Mayo, a Prudential equity analyst, predicts Merrill will pay between $200 million and $1 billion to settle the shareholder suit.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.72 -27.37 -1.33%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs