Fraud settlements revealed Monday against two banks in the Enron money scandal serve notice on financial institutions that they will face major legal difficulties if they are caught engaging in similar transactions, according to a New York Times analysis.
J. P. Morgan Chase and Citigroup, the nation’s two largest banks, agreed to pay almost $300 million in fines and penalties to settle criminal and regulatory accusations that they aided Enron in misrepresenting its true financial condition for years before the company collapsed.
The Times said the Securities and Exchange Commission and prosecutors concluded that Enron lied to investors about its financial condition, but it could not have done so without active help from its friendly bankers. That help constituted fraud. This has not been the historical viewpoint of bankers, the paper said.