Lehman Brothers has tentatively agreed to pay $222.5 million to settle an investor lawsuit over its role as an underwriter for Enron, a source said today.
The New York investment bank said in a written statement that it is in talks to settle "certain litigation" related to a shareholder class-action lawsuit against Enron and its bankers.
The suit was filed in US District Court in Houston. The lead plaintiff, the University of California, said it lost $145 million on Enron investments.
Lehman is one of a number commercial banks and Wall Street firms that have been accused of colluding to mislead Enron shareholders.
Enron collapsed into bankruptcy in 2001 amid accusations of accounting fraud. Other banks that have been named in the lawsuit include Citigroup and JP Morgan Chase & Co. Shareholders are seeking about $30 billion in damages.
"These negotiations have not been completed and there is no assurance that a settlement will be achieved on terms acceptable to the company," Lehman said in the statement.
"The company believes that such settlement, if it occurs, would have no impact on the company's results of operations." Enron officials were not immediately available for comment on the settlement, which was first reported by the Wall Street Journal.
Once the seventh-largest US corporation by revenue, the Houston energy trader imploded in late 2001 as investors discovered it hid billions of dollars in debt and misled markets regarding its true financial health.
Stockholders, stuck with worthless shares, have sued the company's bankers for underwriting bonds and executing complex transactions that generated cash for Enron without adding debt to the balance sheet. In July, Bank of America agreed to pay $69 million to settle its part of the University of California class action suit.