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SAN FRANCISCO (Dow Jones) -- Canadian Imperial Bank of Commerce agreed Tuesday to pay $2.4 billion to Enron investors who claimed the financial services company took part in a massive accounting fraud that led to the collapse of the energy giant.

The settlement with Toronto-based CIBC (BCM) is the largest single action so far on behalf of Enron stock and bond holders, and brings the total payments in the case to $7.1 billion, making this the biggest class-action recovery ever.

Separately, CIBC said in a statement that it would take a pre-tax C$2.8 billion charge to earnings in its fiscal third-quarter, which ends July 31.

The class-action suit covers about 50,000 investors who owned Enron securities between Sept. 1997 and Dec. 2001. With the CIBC settlement, the amount of money available to Enron investors now exceeds the $6.1 billion that Wall Street forked over to WorldCom investors in similar litigation.

William Lerach, the securities lawyer representing the University of California Board of Regents -- the lead plaintiff in the case -- said settlements with other defendants are expected.

"This settlement demonstrates that the university's strategy of aggressively pursuing the defendants is working," Lerach said in a statement.

"We continue to pursue other defendants, including other banks that have been charged with knowingly participating in the scheme to defraud Enron investors," he added. "Beyond today's agreement, the lawsuit continues to proceed very satisfactorily and further large recoveries are anticipated."

As is customary in such cases, CIBC did not admit nor deny wrongdoing. The company, Canada's fifth-largest banking firm and the parent of investment banker CIBC World Markets, said it agreed to the civil settlement to eliminate the uncertainties of a trial.

"By settling this case and maintaining what we believe are adequate reserves for our remaining Enron-related legal issues, we can better focus our energies on our other priorities," Gerry McCaughey, CIBC's president and chief executive, said in a statement.

The settlement has been approved by CIBC directors and is subject to approval by both the University of California Regents and a federal judge in Texas. The University of California's Enron-related investment losses totaled about $150 million, said James Holst, the unversity's general counsel.

The latest agreement comes following a $2.2 billion settlement with JPMorgan Chase Co. (JPM) and a $2 billion agreement with Citigroup (C) in June.

The CIBC action could increase pressure on other defendants in the class-action suit to bring matters to a close. On the conference call, Lerach said CIBC's payout was costlier than previous agreements in part because the company "waited for others to settle before them."

Firms still involved with the litigation include Barclays PLC (BCS), Credit Suisse First Boston (CSR), Merrill Lynch & Co. (MER), Toronto Dominion Bank (TD), Royal Bank of Canada (RY), Deutsche Bank AG (DB) and the Royal Bank of Scotland (RBSPY).

The suit alleges that these firms helped Enron establish partnerships which generated phantom profits and allowed the company to report a healthier balance sheet than it actually had, artificially inflating prices for its stock and debt.

In addition, the class-action names Goldman Sachs Group Inc. (GS) over its role as an underwriter of Enron securities.

In Dec. 2003, CIBC agreed to an $80 million settlement with the Securities and Exchange Commission over allegations of improper dealings related to Enron.

That agreement included $37.5 million to repay ill-gotten Enron gains, a $37.5 million penalty, and $5 million in interest. Several CIBC executives also settled allegations that they helped mislead Enron investors.

Some observers said the civil settlements in the Enron case so far are inadequate to compensate investors for the billions of dollars they lost after Houston-based Enron went bankrupt in 2001.

"A lot more money should be put up by the banks collectively," said Jake Zamansky, a New York-based securities lawyer who represents individual investors. "This being the biggest fraud in corporate history, more should have been put up to compensate the victims."

Other firms including Bank of America Corp. (BAC) and Lehman Brothers Holdings Inc. (LEH), along with Andersen Worldwide, Enron's outside directors and former vice chairman Ken Harrison. already have settled the case for a combined $491.5 million. An additional $32 million was recovered in a bankruptcy proceeding.

The settlement with CIBC was announced after the closing bell. In Tuesday's regular session, shares of CIBC rose 24 cents to $66.36. [ 08-02-05 1929ET ]