Canadian Imperial Bank of Commerce agreed to pay investors $2.4 billion to resolve claims it helped Enron Corp. inflate revenue by hiding debt, the largest fraud settlement stemming from the energy trader’s 2001 collapse.
CIBC, Canada’s fifth-largest bank by assets, will make the payment as part of a $30 billion class-action lawsuit, William Lerach, investors’ lead attorney, said today in an e-mailed statement. The accord tops the $2.2 billion JPMorgan Chase & Co. paid in June to settle its part of the case.
“The longer you wait to settle in a case like this, the more you end up paying,” Robert Zito, a New York lawyer who defends companies facing securities suits, said before the agreement was announced. “That’s why, even though CIBC is smaller than Chase, it ended up paying more.”
The settlement, equal to almost 10 times the C$300 million ($247 million) that CIBC set aside before tax for Enron litigation, leaves Merrill Lynch & Co., Credit Suisse First Boston and five other former Enron lenders facing claims they helped executives inflate revenue. Investors are seeking compensation after a plunge in shares of Enron, once the seventh-biggest U.S. corporation, erased about $67 billion of market value in less than 16 months.