NEW YORK (CNN/Money) -
Federal securities regulators have notified J.P. Morgan Chase that the bank could be sued over allegations it enabled Enron to mask its debt, the company said Tuesday.
The Securities and Exchange Commission has sent the second largest U.S. bank a so-called Wells notice, said a J.P. Morgan spokesperson. The notice is a request for information that could lead the SEC to file civil charges if the two sides don't reach a settlement.
J.P. Morgan last year set aside $900 million to pay for lawsuits over the bank's dealings with Enron and to settle charges of conflicts of interest on Wall Street. Citigroup is also said to be the subject of an Enron probe, while Merrill Lynch this year said it will pay $80 million to end an inquiry into two of the No. 1 brokerage firm's deals with the bankrupt energy trader.
J.P. Morgan would not elaborate on the contents of the notice from the SEC, which declined to comment.
But the SEC's notice, first reported Monday in the Financial Times, is believed to outline transactions between J.P. Morgan and Enron that allowed the energy trader to mask its true financial condition by shifting debt.
Enron's revelations of overstated profits and hidden debt pushed the energy trader toward what was the biggest bankruptcy in history in December 2001. The collapse wiped out billions in shareholder assets and eliminated thousands of jobs.
Shares of J.P. Morgan (JPM: up $0.75 to $27.29, Research, Estimates), which reports first-quarter results before the market opens Wednesday, have had a solid run of late. The stock is up 30 percent since mid-March.
-- from staff and wire reports
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