Merrill to pay Enron $29.5m settlement

Merrill Lynch & Co., the third-largest US securities firm by market value, agreed to pay $29.5 million to Enron Corp. and to drop some bankruptcy claims to settle a suit claiming it contributed to the energy trader's collapse.

Merrill Lynch agreed to give up $73.7 million in claims against Enron, according to a statement yesterday . Other creditors have been paid about 20 cents on the dollar for their claims. Under the agreement, New York-based Merrill will still be able to argue in bankruptcy court that Enron owes it about $10 million.

``We believed it was in the best interest of our shareholders to resolve this matter," Merrill spokesman Mark Herr said .

Merrill's payment is smaller than those of other financial institutions Enron sued in 2003, claiming they had aided the accounting fraud that drove the company into bankruptcy. Credit Suisse settled for $90 million in May. Lehman Brothers Holdings Inc. agreed in February to pay $69.9 million and to relinquish a bankruptcy claim. Canadian Imperial Bank of Commerce, or CIBC, agreed to pay $250 million in August.

Enron said in the statement that the size of yesterday's settlement ``reflects that Merrill Lynch was involved in fewer transactions with Enron" than other defendants.

The settlement will reduce Merrill's pretax earnings in the second quarter by $29.5 million, the firm said in a filing with the Securities and Exchange Commission. Merrill said it already had written off the value of the claims that will be dropped.

A federal judge supervising Enron's bankruptcy, the second-largest in US history, must approve the agreement. Enron, which no longer conducts business, has been selling assets and pursuing lawsuits since its December 2001 bankruptcy filing to raise money for creditors.

Before the settlement, Enron had recovered almost $6 billion from asset sales and litigation.