The WSJ has an article out this morning worth perusing: “Probe of Enron Ex-Officers Intensifies”
Isn’t it funny, that after 18 months of inactivity and lax enforcement, this week — a mere days after New York Attorney General Eliot Spitzer did the SEC’s job for them and revealed how corrupt large swaths of the mutual fund business — this investigation seems to have been rekindled?
“After some 18 months of investigation and a fistful of indictments in the Enron Corp. scandal, federal prosecutors are ratcheting up their efforts to determine whether former company chief executives Kenneth Lay and Jeffrey Skilling should face criminal charges.
Federal officials have expressed the belief that they have identified individuals who possess evidence that could help provide the basis for criminal charges against one or both of the men, says a person familiar with the matter. Much of the work in the coming weeks will be focused on trying to get those individuals to cooperate. Prosecutors are hoping to be able to reach decisions concerning the two former CEOs within the next couple of months, say people familiar with the probe . . .”
Do not doubt for a second Spitzer’s pressure applied is embarrassing the daylights out of Federal law enforcement agencies at all levels. Regardless of whatever political direction they have gotten, G-men are furious at constantly being shown up.
In my experience, the SEC attorney’s I’ve met all want to do their jobs well; They have been desperate for adequate resources and leadership and staffing.
“A Justice Department spokesman said the Enron criminal investigation remains “active and ongoing,” but declined to elaborate. Both Mr. Lay and Mr. Skilling consistently have denied any wrongdoing in connection with their stewardship of Enron . . .”
Really pathetic; Here’s the money paragraph:
“The federal investigators have been focusing particular efforts on Mr. Skilling, and it appears that prosecutors believe they are closer to having enough to file criminal charges against him than Mr. Lay, say people familiar with the matter. Among other things, investigators have been asking about what one person termed “earnings management” issues. There has been much controversy over Enron’s extensive use of off-balance-sheet partnerships and financial structures to mask losses and produce earnings. Investor concerns about that complex financial network played a major role in forcing Enron to seek bankruptcy-law protection in December 2001. Some of these financial structures also have been cited in federal indictments already filed against several former Enron officials, including the former chief financial officer, Andrew Fastow and former corporate treasurer Ben Glisan. Mr. Fastow has denied wrongdoing and is scheduled to go to trial in April.”
Better late than never.
Update (9:57am Sept. 10):
Just found this Reuters story this morning, and its right on target with what we’ve been discussing:
A top SEC lawyer acknowledged that the agency has known about the market-timing practice and said the commission has urged the fund industry to put a stop to the problem, with some success.
But sources close to the SEC said it may also have known about after-hours trading and failed to take action — a more serious criticism.
If the SEC did know, “that would be a violation of the public trust,” said Jason Greene, an associate professor at Georgia State University’s Robinson College of Business.
“It’s hard to imagine that they wouldn’t consider that an important violation of the funds’ duties to their shareholders,” Greene said.
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