SEC Fines Merrill Lynch for Role in Enron; Investment House to Pay $80 Million to Settle Charges It Helped Manipulate Accounting
Byline: Patrice Hill, THE WASHINGTON TIMES
The Enron Corp. scandal came home to Wall Street yesterday as the Securities and Exchange Commission levied one of its largest penalties to date against Merrill Lynch & Co. to settle charges that it helped Enron manipulate its books.
Wall Street's biggest investment house agreed to pay an $80 million penalty, which is to be mostly returned to shareholders as partial restitution for $60 billion in investment losses, and said it will not participate in stock-manipulation schemes again.
"This action is a message to all who would help a reporting company commit fraud," said SEC Chairman William H. Donaldson, the former head of a top Wall Street firm, announcing his first major enforcement action against former colleagues. The complaint also charges four senior Merrill Lynch executives with aiding Enron's securities fraud.
Mr. Donaldson said the practices targeted in the complaint, helping companies manufacture earnings through complex and devious financial transactions, were widespread on Wall Street during the past decade and must be snuffed out if investors are to regain confidence in the markets.
"We will bring the full weight of our enforcement arsenal" against erring firms and employees, he said. "Our commitment to protect investors demands nothing less."
Two other top investment banks, Citigroup and J.P. Morgan, have also been implicated in investigations of the Enron deals by the SEC, Justice Department and congressional committees in the past year. Mr. Donaldson said more enforcement actions are likely to arise from those investigations.
The SEC is also negotiating a global settlement with state securities regulators to disgorge an additional $1 billion from Wall Street firms and to prohibit the deceptive financial practices that led to a massive wave of corporate scandals last year. …