< meta name="DC.Date.Valid.End" content="20050825"> Amendment Nine: Enron

Saturday, November 20, 2004


Out of 11!! Let's have a party. It seems a lot of people missed this. On page 16 of Enron's 11/19 filing with the SEC, the exit from Chapter 11 officially took place. Still a lot of house-cleaning to be done. But its as convenient a time as ever to reflect.

Enron went into 11 with a bang. Though many hedge funds had long suspected foul play, and several even issued opinions concerning various accounting shenanigans at the giant energy co., no one on "the street" was really expecting what happened. Beyond Ken Lay and some corporate greed, what really happened was a major accounting firm lost its business, a lot of employees lost their savings, a lot of creditors lost $.80 on each dollar of claim they had, and to this day no one knows how the SEC missed this one for so long.

That fact, that the SEC just keeps missing these major cases (Adelphia, Tyco, Worldcom... maybe Fannie Mae?) even when they have ample notice, is really disturbing to people in my business. The secret story of Enron, many of us fear, is this... some companies get a green light and a presumption of innocence, while others are given a first-rate full exam just to get cleared.

Does the SEC play favorites? I'm not sure. But I do know this. I was one of those people in the financial industry who said a long, long time ago that Enron's books looked shaky, and I gave some pretty detailed analysis to a colleague who was at the SEC at the time. His response: "Oh, well Enron is a really complicated business." I think he may have been using the term "complicated" a little differently than I use it. But, you get the picture.

Oh and one more question, why didn't the Kerry camp make a bigger stink about Bush's Enron connection? Were the polls unfavorable?