updated 9/23/2004 10:56:05 AM ET 2004-09-23T14:56:05

Wall Street brokerage house Lehman Brothers Holdings Inc. is close to reaching a deal to pay about $220 million to settle a class-action lawsuit alleging that it and other big brokerage firms participated in a scheme with Enron Corp. executives to mislead shareholders, The Wall Street Journal said Thursday.

Lehman would pay the investors who had billions of dollars in losses as a result of Enron's collapse amid an accounting scandal in 2001, the Journal said, citing a person close to the matter.

Lehman said the negotiations aren't complete and "there is no assurance that a settlement will be achieved on terms acceptable to the company. The company believes that such settlement, if it occurs, would have no impact" on its financial situation.

Lehman's settlement would follow a settlement by Bank of America Corp., which in July agreed to pay $69 million to settle similar allegations.

In making its settlement, Bank of America denied wrongdoing.

Lehman's deal would raise the stakes for other firms to follow suit and put the allegations behind them. Some other banks allegedly had a much larger role, and arguably have more liability.

Bank of America and Lehman were underwriters in just a handful of deals, but some shareholders believe their roles were small in comparison to firms like Citigroup Inc. and J.P. Morgan Chase & Co.

Citigroup and J.P. Morgan are among the firms that have put billions of dollars in reserve to cover against possible exposure.

Lehman and Bank of America weren't accused of defrauding the energy company's shareholders, in contrast to financial institutions pursued by Enron shareholders led by the Regents of the University of California, which lost nearly $150 million in the Enron collapse.

Instead, the suit contends the two firms failed to do proper due diligence. Wednesday, analysts speculated that Lehman's and Bank of America's payouts will be covered by insurance.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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