Merrill Lynch, one of Wall Street's premier firms, said on Thursday it would pay $80 million (€74.4 million) to settle a regulatory investigation into two 1999 transactions with failed energy trader Enron.
At issue is a $7 million deal between Enron and Merrill Lynch related to power-generating barges in Nigeria, and a series of energy trades involving Enron and Merrill's energy trading division, which it has since sold. The transactions took place in 1999.
The news is a step toward ending an embarrassing chapter for Merrill Lynch, which has seen its reputation badly tarnished as a result of its dealings with Enron.
Under the terms of what Merrill said was a settlement in principle with the US Securities & Exchange Commission, the firm will pay $80 million in disgorgement, penalties and interest, and take a fourth-quarter 2002 charge to account for the payment.
Without admitting or denying wrongdoing, Merrill Lynch also said it would consent to an injunction barring it from violating federal securities laws.
Executives of Merrill, JP Morgan Chase & Co and Citigroup's Salomon Smith Barney unit were hauled before Congress last summer to explain their business with Enron.
Since then, those Wall Street giants have been hobbled by accusations of misdeeds in their business with Enron.
Fallout from the Enron scandal was evident last September, when Merrill fired two top executives who refused to testify in a US government probe in Enron deals.
The Nigerian barge deal is one of several in an ongoing criminal case against former Enron chief financial officer Mr Andrew Fastow.
Federal prosecutors have described the Nigerian barge deal as an "asset-parking" transaction that allowed Enron, through Fastow-controlled partnerships, to improperly record $28 million in cash flow and $12 million in earnings from a bogus sale to a third party.
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