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they are all Enron - the contagion spreads

Suit filed against J.P. Morgan Chase

Inadequate disclosures on Enron exposure raise concerns

NEW YORK, FEB. 18 — A shareholder lawsuit seeking class-action status was filed against J.P. Morgan Chase & Co., alleging the company issued misleading statements concerning its exposure to Enron Corp. 
       OFFICIALS AT J.P. Morgan weren’t immediately available for comment Sunday.
       In a press release, plaintiff law firm Glancy & Binkow LLP said the lawsuit was filed on behalf of people who purchased J.P. Morgan securities between Nov. 28 and Jan. 28.
       Enron filed for bankruptcy in early December. J.P. Morgan initially said its Enron exposure was $900 million.
       But on Dec. 19, J.P. Morgan Chase said its exposure to Enron was nearly $1 billion more than it has already disclosed, raising concerns among investors whether the bank has even more exposure to the energy trader lurking beneath the surface.
       The bank said it had sued several insurance companies which are seeking to back out of commitments to assure $1.1 billion in payments related to crude-oil and gas contracts. Of that $1.1 billion, $965 million is owed to J.P. Morgan Chase. The bank’s litigation seeks to force the insurers to make good on the payments.
       The SEC is reviewing the adequacy of J.P. Morgan Chase’s disclosures about its exposure to Enron and in particular whether these disclosures were made in a timely fashion, people familiar with the situation say.
       Separately, the Securities and Exchange Commission, as part of its Enron probe, is reviewing the financing lines that banks such as J.P. Morgan Chase Citigroup Inc. provided to the energy-trading company, these people say. Regulators are examining whether the banks helped to create the intricate and misleading financial structure that eventually led to Enron’s bankruptcy-law filing, these people say.



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