The Federal Reserve Wednesday terminated an enforcement action against Canadian Imperial Bank of Commerce (CIBC) over structured transactions the bank made with Enron Corp. before the energy giant’s collapse. Last week the Fed terminated a similar action against Citigroup Inc.
No details were provided by the Fed. The banks had been prohibited from engaging in certain structured finance deals in order to achieve “misleading earnings, revenue or balance-sheet effect.” The deals involved Enron special purpose entities, which the company used to keep debt off its balance sheet. The agreements between the Fed and the banks had required the banks to establish certain remedial policies and procedures.
Enron filed for bankruptcy protection in December 2001.
In August 2005 Enron reached agreement with CIBC to settle the bank’s portion of the Enron MegaClaims litigation (see Daily GPI, Aug. 8, 2005). In July 2004 a former CIBC managing director agreed to pay $528,750 to settle charges brought by the Securities and Exchange Commission (SEC) in connection with Enron (see Daily GPI, July 15, 2004). In December 2003 the SEC and the Department of Justice reached settlements with CIBC. The SEC complaint charged CIBC and three executives with having helped Enron to mislead its investors through structured financial transactions (see Daily GPI, Dec. 24, 2003).
In May a $6.6 billion civil settlement by CIBC, Citigroup Inc. and JP Morgan Chase & Co. of claims by shareholders that the banks helped conceal Enron’s financial problems was approved by U.S. District Judge Melinda Harmon in Houston (see Daily GPI, May 25).
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