J.P. Morgan Chase & Co. and Citigroup Inc. agreed Monday to pay more than US$300 million for their roles in Enron Corp.’s manipulation of its financial statements.

J.P. Morgan will pay US$135 million and Citigroup will pay US$120 million as part of the settlement, the Securities and Exchange Commission said.

In addition to the federal payments, the two banks agreed to pay US$50 million total to New York state and New York City to settle a similar investigation, the Manhattan district attorney’s office announced shortly afterward.

The SEC said that each institution helped Enron mislead its investors by characterizing what were essentially loan proceeds as cash from operating activities. The proceeding against Citigroup also resolves the commission’s charges stemming from the assistance Citigroup provided Dynegy Inc. in manipulating that company’s financial statements through similar conduct.

The SEC filed a civil injunctive action in U.S. District Court in Texas against J.P. Morgan Chase. Without admitting or denying the allegations, the firm consented to the entry of a final judgment in that action that would permanently enjoin it from violating the antifraud provisions of the federal securities laws. J.P. Morgan Chase agreed to pay US$135 million as disgorgement, penalty, and interest.

It also instituted an administrative proceeding and issued an order making findings and imposing sanctions on Citigroup. Without admitting or denying the commission’s findings, Citigroup consented to the issuance of the commission’s ordering it to cease and desist from committing or causing any violation of the antifraud provisions of the federal securities laws, and it agreed to pay US$120 million as disgorgement, interest, and penalty. Of that amount, US$101 million pertains to Citigroup’s Enron-related conduct and US$19 million pertains to the Dynegy conduct.

The SEC said it intends to direct the money paid by the two firms to fraud victims — US$236 million to Enron fraud victims and US$19 million to Dynegy fraud victims.

“These two cases serve as yet another reminder that you can’t turn a blind eye to the consequences of your actions — if you know or have reason to know that you are helping a company mislead its investors, you are in violation of the federal securities laws,” said Stephen Cutler, director of SEC’s Enforcement Division.

The SEC said that the two helped their clients design complex structured finance transactions. The structural complexity of these transactions had no business purpose aside from masking the fact that, in substance, they were loans. As a result, Enron and Dynegy presented false and misleading pictures of their financial health and results of operations.