JPMorgan Chase & Co. said Friday it would pay $350 million to Enron in order to settle its part of the "Megaclaims" lawsuit filed by the energy trader against 10 banks, alleging that they "aided and abetted fraud."
Houston-based Enron Corp. claims that 10 financial institutions, including JPMorgan, could have prevented the energy trader's collapse.
JPMorgan also said it will give up certain contested claims it has filed as part of Enron's bankruptcy proceedings, but can proceed with others. JPMorgan will have the option of increasing its cash payment in exchange for retaining more of its claims and having them allowed in the bankruptcy proceedings.
In a separate statement, Enron said those claims have a value of $660 million, and that the settlement with JPMorgan could reach up to $1 billion.
JPMorgan does not expect the settlement, which is subject to the approval of the bankruptcy court, to have a "material adverse impact" on earnings.
"With today's agreement, we have put behind us another significant piece of our Enron exposure," said William B. Harrison Jr., Chairman and CEO.
JPMorgan agreed in June to pay $2.2 billion to Enron shareholders to settle its part of a class-action lawsuit, after initially turning down a chance to settle for significantly less.
Earlier this month, Canadian Imperial Bank of Commerce agreed to pay $250 million in the Megaclaims suit, while also agreeing to a $2.4 billion settlement _ the largest so far _ in the class-action lawsuit.
Combined with similar agreements, the settlements have now reached more than $7 billion, said lawyers for the wronged investors.
Some 50,000 Enron stock and bond holders led by the University of California's board of regents filed claims as part of the lawsuit. Investors claim a number of global banks and brokerages helped Houston-based Enron continue to operate and raise money even as the company was imploding.