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When gold soars $7, you GATA love those coincidences
Thursday January 16, 2003
NEW YORK (Reuters) - J.P. Morgan Chase amp; Co. officials
have appeared before a Manhattan grand jury about their
dealings with bankrupt energy trader Enron Corp. but it is
unlikely the No. 2 U.S. banking company will face criminal
charges, a source familiar with the matter said on Thursday.
Manhattan District Attorney Robert Morgenthau has been
investigating J.P. Morgan's role in Enron's collapse and
interviewing bank executives, the source said. The
company has acknowledged the probe in regulatory
filings since at least May 2002.
quot;We are cooperating fully with the district attorney's
investigation,quot; a J.P. Morgan spokesman said, declining
to go into further detail. Officials at the district attorney's
office were not available for comment.
Enron has been a thorn in Wall Street's side as critics
blamed J.P. Morgan and rivals like Citigroup Inc. and
Merrill Lynch amp; Co. for setting up intricate financing
arrangements to hide debt for the energy trader.
J.P. Morgan on Jan. 2 settled a dispute with 11 of its
insurers over so-called surety bonds, which they issued
to guarantee a series of gas trades between Enron and
some offshore vehicles arranged by the bank.
The surety bonds were triggered when Enron declared
bankruptcy in December 2001, but the insurers claimed
the trades were actually loans to keep debt off Enron's
balance sheet.As part of the settlement, J.P. Morgan
will recoup about 60 percent of the $965 million it claimed
it was owed by investors.
But the bank said it will take a fourth-quarter charge of
$400 million to cover the rest of the loss and $900 million
to set up reserves to pay for future litigation related to
Enron and other legal tangles.
The Manhattan district attorney's office is particularly
interested in Mahonia, an offshore entity created by
J.P. Morgan and that traded oil and gas with Enron,
The Wall Street Journal said in its Thursday edition.
There is a chance individual employees will be charged
with wrongdoing as a result of Morgenthau's investigation,
the source said, speaking on condition of anonymity.