Citigroup to pay $2 bn to settle Enron lawsuit

Citigroup on Friday said it would pay $2 billion to Enron Corp investors who accused it of helping engineer a massive accounting fraud at th...

Citigroup on Friday said it would pay $2 billion to Enron Corp investors who accused it of helping engineer a massive accounting fraud at the energy trader.

The class-action settlement is one of the largest in corporate history, though it is less than the $2.58 billion that Citigroup agreed to pay WorldCom Inc investors in 2004. The settlement may put pressure on a series of other major banks to settle with Enron investors.

Citigroup did not admit wrongdoing in agreeing to settle. It said the pre-tax payment is fully covered by its existing litigation reserves and that it does not plan to adjust its remaining reserves.

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‘‘It is a key priority for Citigroup to resolve major cases like this one and to put a difficult chapter in our history behind us,’’ Citigroup CEO Charles Prince said. ‘‘By doing so, we will be better positioned to realise our goals.’’

The settlement must be approved by the bank’s board of directors and the board of regents of the University of California, the lead plaintiff for investors in the case. A federal court in Houston also must approve the agreement.

Other financial institutions facing claims for their role in Enron’s December 2001 collapse include JP Morgan Chase and Co, Barclays Plc, Credit Suisse First Boston, Merrill Lynch, Deutsche Bank AG and the Royal Bank of Scotland among others.

Lehman Brothers agreed to a $222.5 million settlement, while Bank of America agreed to pay $69 million. — Reuters

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