Risk & Compliance

Bank of America Settles Enron Suit

BofA was sued solely for its role as an underwriter for certain Enron-related debt offerings.
Stephen TaubJuly 7, 2004

Bank of America has announced that it will pay about $60 million to settle a class action lawsuit, led by the regents of the University of California, on behalf of investors in Enron securities.

Unlike a number of other financial institutions, Bank of America had relatively small dealings with Enron, according to The Wall Street Journal, and was sued solely for its role as an underwriter for certain Enron-related debt offerings. The class consists of all investors who purchased securities issued by Enron from October 19, 1998 to November 27, 2001.

Under the settlement, the banking giant denied that it violated any law and explained that it settled the matter solely to eliminate the uncertainties, expense, and distraction of further protracted litigation.

BofA was not accused of defrauding shareholders, the Journal observed, in contrast with remaining class-action defendants that allegedly helped Enron with phony deals to boost earnings.

Enron shareholders have sued Merrill Lynch, Credit Suisse Group, Deutsche Bank, Canadian Imperial Bank of Commerce, Barclays, Toronto-Dominion Bank, and Royal Bank of Scotland, noted the paper; other defendants still facing the class action include Citigroup and JP Morgan Chase.

When all of the suits are resolved, financial institutions could wind up shelling out between $5 billion and $10 billion, according to TheStreet.com, citing legal experts.

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