JP Morgan Chase, the second-largest US bank, has reached 'an agreement in principle' to pay $2.2 billion to settle a class-action lawsuit from Enron stock and bond holders, the bank said late last night in a statement.
The deal is the largest civil settlement linked to the spectacular 2001 collapse of Enron, at one time the seventh largest US company.
JP Morgan said it had 'reached an agreement in principle to settle the Enron class action litigation entitled Newby v. Enron', the lead plaintiff of which is the University of California, the statement said. The bank said the settlement must be approved by the UC's board of regents and JP Morgan Chase's board of directors.
JP Morgan Chase's payment of $2.2 billion 'to the settlement class' is 10% larger than the $2 billion payment announced last week by Citigroup in the same case.
JP Morgan Chase also announced that it expected to take a charge to earnings of approximately $2 billion this quarter to cover the settlement. The settlement does not include any admission of wrongdoing by JPMorgan Chase.
The suits resulted from the implosion of high-flying energy trading firm Enron, which filed for bankruptcy after it was found to have used off-balance-sheet transactions to hide huge debts. Enron has neither admitted nor denied guilt in its collapse.
The settlement is one of the largest in history, but lags behind the $2.6 billion Citigroup agreed to pay WorldCom investors last year in a similar suit.
So far, Lehman Brothers and Bank of America have already agreed to far smaller settlements in the Enron case, of $222.5m and $69m, respectively. Several other banks are still facing claims in the suit, including Credit Suisse First Boston, Merrill Lynch, Deutsche Bank and Toronto Dominion Bank.
