Nick Snow
OGJ Washington Editor
WASHINGTON, DC, Jan. 11 -- Daniel H. Bayly, Merrill Lynch & Co.’s (ML) former global head of investment banking, settled civil charges of aiding and abetting the Enron Corp. fraud, the US Securities and Exchange Commission announced.
SEC said US District Court in Houston entered a final judgment on Dec. 31, 2009, ordering Bayly, who neither admitted nor denied SEC’s allegations, to pay $301,000 for deposit in the commission’s Enron Fair Fund and to not serve as an officer or director of a publicly traded company for 5 years. He also was enjoined from violating federal antifraud provisions and from aiding and abetting violations of the periodic reporting, books-and-records, and internal control provisions, SEC said.
SEC charged Bayly and three other former ML executives on Mar. 17, 2003, with aiding and abetting Enron’s earnings manipulation. That action remains stayed against Bayly’s codefendants while a parallel criminal prosecution is resolved, it indicated.
The commission also sued and simultaneously settled all of its Enron aiding-and-abetting charges against the investment bank the same day in 2003. ML was enjoined from violating federal securities laws and ordered to pay $80 million for distribution to injured investors through the SEC’s Enron Fair Fund under that agreement.
In its complaint against Bayly, SEC alleged that he substantially assisted Enron’s sham sale of an interest in certain Nigerian barges during late 1999. It said while the interest in the barges purportedly passed to a special purpose entity in which ML invested equity capital, Bayly had received an oral commitment from Andrew S. Fastow, Enron’s chief financial office at the time, that the investment banker would be repaid within 6 months at a specified rate of return.
In substance, SEC said, this side agreement transformed what was supposed to be an equity investment into a bridge loan with a fixed interest rate. The complaint alleged that Bayly helped enable this sham “sale” of Enron’s interest in the Nigerian barges to maintain favorable relations with the Houston energy trading company. By participating in the arrangement, which let Enron fraudulently record $28 million in revenue and $12 million in pretax income, Bayly aided and abetted Enron’s violations of federal securities laws, SEC said.
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