Merrill Lynch does not have to admit any guilt

As part of the settlement, Merrill Lynch does not admit any wrongdoing.

The deal would end the Securities and Exchange Commission's (SEC) investigation into two transactions with Enron in 1999.

The SEC made no comment on the settlement, which still needs the approval of its commissioners.

Enron, based in Houston, filed for the largest bankruptcy in US corporate history in December 2001.

Guilt free deal

Merrill Lynch said the 1999 transactions involved buying an energy-producing barge service in Nigeria for $7m from Enron, which had promised to buy it back within six months.

A number of energy trades involving Enron and Merrill's energy trading division were also under investigation.

But Merrill claimed in written evidence that its Enron deals were "appropriate and proper based on what we knew at the time".

The brokerage was accused of knowingly aiding Enron in falsifying its accounts, which claimed the deal as a sale and not a loan.

Merrill Lynch also said it has agreed to an injunction barring it from further violating federal securities laws.