Merrill Lynch & Co will pay $80 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.
Under the terms of what Merrill said is a settlement in principle with the US Securities and Exchange Commission, the firm will pay $80 million in 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.
Fallout from the Enron scandal was evident last September, when Merrill fired two top executives who refused to testify in a US government inquiry in Enron deals.
Federal prosecutors have described the Nigerian barge deal as an "asset parking" transaction that allowed Enron, through partnerships controlled by former Enron CFO Mr Andrew Fastow, to improperly record $28 million in cash flow and $12 million in earnings from a bogus sale to a third party.
Merrill is not named in the indictment and is not charged with any crime, but the court papers refer to a "major financial institution" as the buyer.