Posted on: Thursday, September 25, 2003

Enron sues investment banks

By Kristen Hays
Associated Press

HOUSTON — Enron Corp. is suing some of its investment banks, accusing them of colluding with company executives in shady deals that made millions for both the insiders and the banks before Enron's collapse.

Defendants in the lawsuit filed late yesterday in U.S. Bankruptcy Court in New York include banking titans J.P. Morgan Chase & Co. and Citigroup Inc., two of Enron's largest creditors.

The two banks in July paid nearly $300 million to settle regulatory allegations of helping the company defraud investors by setting up complex financial transactions that inflated profits and hid debt. Also among defendants is Merrill Lynch & Co., which paid $80 million in March to settle Securities and Exchange Commission allegations that it helped Enron commit fraud. The firm avoided prosecution last week by agreeing to cooperate with the Justice Department's Enron Task Force and implementing internal reforms to prevent future dubious deals with clients.

Other defendants include Canadian Imperial Bank of Commerce, Deutsche Bank AG and Barclays Bank PLC.

Various regulatory and criminal investigations have led to charges that some Enron executives conspired to cook Enron's books.

Enron's lawsuit alleges those insiders conspired with the banks to inflate profits and hide debt while the banks pocketed millions of dollars in fees.