Updated from 8:01 p.m. EDTJ.P. Morgan Chase ( JPM - Get Report) has agreed in principle to settle a pending federal class-action lawsuit brought on behalf of Enron security holders. Under the terms of the settlement, J.P. Morgan will make a payment of $2.2 billion to the settlement class, the company said in a statement late Tuesday. Plaintiffs' attorneys' fees will be paid out of the settlement. It's the second $2 billion settlement for J.P. Morgan, the nation's third-largest bank, in just three months. In March, the firm
According to The Associated Press, some 50,000 Enron stock and bond holders, led by the University of California's board of regents, filed claims as part of the suit, which alleges that a number of banks and brokerages helped Houston-based Enron operate and raise money even as it was collapsing. The suit claimed J.P. Morgan helped Enron falsify financial statements and hide debt, while the bank's analysts were issuing falsely positive and misleading reports, according to The Wall Street Journal. It said the bank underwrote Enron securities and lent the company more than $1 billion, while helping to syndicate more than $4 billion of bank loans. Of the $2 billion addition to J.P. Morgan's litigation reserves, about one half is associated with the potential costs of Enron-related matters, including the cost of settling this class action, J.P. Morgan said. The rest represents management's current best estimate associated with remaining legal actions, proceedings and regulatory inquiries pending against the firm. J.P. Morgan's settlement comes just four days after Citigroup ( C - Get Report), the nation's largest financial services firm, agreed to pay Enron investors $2 billion to settle its portion of the suit. The settlement is the sixth made in the long-running Enron debacle, with agreements still pending with Barclays ( BCS), Credit Suisse First Boston, Merrill Lynch ( MER), Toronto Dominion Bank ( TD - Get Report), Royal Bank of Canada ( RY - Get Report), Deutsche Bank ( DB - Get Report) and the Royal Bank of Scotland. Before the Citigroup settlement, attorneys had settled for $491.5 million in deals with Lehman Brothers ( LEH), Bank of America ( BAC - Get Report), Andersen Worldwide, Enron's outside directors and Enron's former vice chairman, Ken Harrison. "We continue to pursue other defendants, including other banks that have been charged with knowingly participating in the scheme to defraud Enron investors," William Lerach, the lawyer representing the University of California, told the AP. "Beyond today's agreement, the lawsuit continues to proceed very satisfactorily and further large recoveries are anticipated."