[Mb-civic] CBC News - CIBC PAYS $2.4B US TO SETTLE ENRON LAWSUIT

[CBC News Online]

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CIBC PAYS $2.4B US  TO SETTLE ENRON LAWSUIT
WebPosted Tue Aug  2 16:29:14 2005

---The Canadian Imperial Bank of Commerce has agreed to pay $2.4 billion
US to settle an Enron lawsuit, the company said Tuesday.

That's about $2.9 billion Canadian, significantly more than the $2.2
billion profit the bank made last year.

The lead plaintiff in the class-action suit – in May CIBC called it
a "purported class action" – said the settlement is the single-
biggest payment by a financial institution in the Enron litigation.

The University of California said Citigroup paid $2 billion US and J.P.
Morgan Chase $2.2 billion US.

CIBC did not admit any wrongdoing. In a statement, it said it "agreed to
the settlement solely to eliminate the uncertainties, burden and expense
of further protracted litigation. "

The university heads a group of pension funds and investment managers
which claim that "systematic fraud by Enron and its officers led to the
loss of billions and the collapse of the company."

FROM JULY 29, 2003: CIBC aided Enron on financial dealings: report

CIBC had earlier been accused to helping Enron to hide debt. "CIBC aided
and abetted certain Enron officers in breaching their fiduciary duties,"
Enron's court-appointed examiner Neal Batson reported in 2003.

FROM DEC. 22, 2003: CIBC agrees to $80 million US penalty over Enron
accounting fraud


Later that year, the bank agreed to pay $80 million US to settle
allegations it had helped Enron commit the accounting fraud.

At the time, then-president and CEO John Hunkin said the bank had "put a
major portion of the Enron matter behind us," and in May, the bank said
it would fight fight any Enron cases vigorously.

$2.5B charge

The bank said Tuesday that it will take a $2.5 billion after-tax charge
against its profit in the third quarter ended July 31 to cover the
payment and other Enron issues.

It said it will still have the minimum capital required by regulators
after the charge.

It took a $300 million charge last year to cover Enron litigation, and
has insurance coverage.

The payment is equal to about 22 per cent of shareholder's equity the
bank reported on its most recent balance sheet.

"By settling this case and maintaining what we believe are adequate
reserves for our remaining Enron related legal issues, we can better
focus our energies on our other priorities," Gerry McCaughey, president
and CEO, said in a statement.

The university said that with the CIBC payment, the Enron case is now the
largest class action recovery in history. Other defendants are talking
about settlements, it said.

FROM MAY 25, 2005: CIBC profit drops 13% on market timing provision

CIBC has had other problems recently requiring it to make payments. It
took an additional $75-million charge in May relating to allegations it
provided financing and brokerage services for hedge funds that were
engaged in the market timing of mutual funds, which regulators fobid when
it treats unit-holders differently.

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