Securities regulators have charged four former senior Merrill Lynch executives with helping Enron inflate profit and mislead investors with two complex transactions. The Securities and Exchange Commission also approved a settlement in which Merrill will pay $80 million to resolve the case.
The SEC and the nation's biggest brokerage firm last month reached a tentative agreement regarding the 1999 financing deals with the now-bankrupt energy company, which the SEC commissioners approved Monday.
Merrill neither admitted to nor denied wrongdoing in the settlement.
The four former executives are disputing the allegations.
The SEC move was the latest in a series of actions by law enforcement authorities related to Enron Corp., whose collapse into bankruptcy in December 2001 destroyed the retirement savings of thousands of employees and hurt individual investors and pension funds nationwide:
SEC officials said Monday that all of the $80 million that Merrill is paying in the settlement will eventually go to compensate investors who were hurt by the fraud.
They said the $80 million, comprising civil fines, restitution payments and interest, represented one of the largest amounts ever paid in a civil securities law case.
“This action is a message to all who would help a … company commit fraud: we will bring the full weight of our enforcement arsenal against you,” said SEC Chairman William H. Donaldson.
In a civil suit filed in federal court in Houston, the SEC alleged that the four former Merrill executives “aided and abetted Enron Corp.'s earnings manipulation” by working with Enron to set up the transactions.
The SEC named former Merrill vice chairman Thomas W. Davis, 49; Schuyler Tilney, 47, an investment-banking managing director who directly oversaw corporate finance matters related to Enron; Robert Furst, 41, a managing director in the investment banking division; and Daniel Bayly, 55, the global head of the division who later became the firm's chairman of investment banking.