CIBC pays $80m to settle Enron
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WASHINGTON (Reuters) -- Canadian Imperial Bank of Commerce will pay $80 million to settle charges it helped Enron Corp. in the fallen energy trader's massive accounting fraud, U.S. regulators say.
The Securities and Exchange Commission also said Tuesday it sued three current or former CIBC executives in the case.
Two of them have settled and will pay a total of more than $600,000, the SEC said as it moved its wide-ranging Enron probe forward.
The SEC said it charged CIBC, a major Canadian financial concern, and the three executives with "having helped Enron to mislead its investors through a series of complex structured finance transactions over a period of several years."
"Today's action demonstrates that neither financial institutions nor their executives can hide behind the technical complexities of structured transactions," SEC Enforcement Division Director Stephen Cutler said at a news conference.
A number of other major financial companies in recent months also have settled charges related to complex deals that the SEC said allowed Enron to hide debt and inflate cash flow.
Enron, once the seventh-largest U.S. company, collapsed two years ago in the first of a series of corporate scandals to shake U.S. markets. Its December 2001 bankruptcy remains the second-largest in U.S. history after that of WorldCom Inc.
In a separate action, Canada's bank regulator and the U.S. Federal Reserve said they jointly settled with CIBC over Enron dealings. The Fed and Canada's Office of the Superintendent of Financial Institutions said CIBC must adopt remedial policies.
"We are pleased that the actions we have taken today will bring to a close these investigations of CIBC," John Hunkin, CIBC president and chief executive, said in a statement.
"We are pleased to have put a major portion of the Enron matter behind us. We still have various Enron-related civil suits pending, and we intend to defend ourselves vigorously in those cases," Hunkin said.
The $80 million payment to the SEC will consist of $37.5 million in repayment of ill-gotten gains, a $37.5 million penalty and $5 million in interest, the SEC said.
Hunkin said CIBC's settlement agreement also resolved an investigation by the U.S. Justice Department. "The department has agreed not to prosecute CIBC with respect to certain transactions involving CIBC and Enron," CIBC said.
In return, CIBC said, it agreed to continue cooperating with the Justice Department, to exit certain business activities and to adopt new policies and procedures.
In July, Citigroup and J.P. Morgan Chase & Co. agreed to pay more than $300 million combined to settle charges related to Enron. Merrill Lynch & Co. settled with the SEC in March for $80 million in an Enron case.
Named as a defendant in the SEC's CIBC action was Ian Schottlaender, a former managing director in the bank's corporate leveraged finance group in New York. The SEC said Schottlaender was contesting the charges.
CIBC Executive Vice President Daniel Ferguson and former CIBC Executive Director Mark Wolf agreed to settle with the SEC without admitting or denying wrongdoing, it said.
Ferguson will pay $563,000 in restitution, penalties and interest, while Wolf will pay $60,000, the SEC said.
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