Enron – False Financial Practices & Damages to Shareholders

Jeffrey Skilling, Enron's former president and briefly its chief executive, denied charges he had dumped Enron shares even as he told others to buy.

''I did not dump any stock in Enron because I knew or even suspected that the company was in financial trouble,'' he said.

If, in fact, Skilling did maintain or increase his ownership of Enron shares, it was because he was given more and more options. Even under Enron's option plan, in which options fully vested in three years, an unusually quick rate, Skilling wound up holding many Enron shares he could not legally sell.

In 2000, for example, Skilling was granted 867,880 options to buy shares, in addition to his salary and bonus totaling $6.45 million. In that year, he exercised and sold just over 1.1 million shares from options he received in prior years, and pock

If an asset was 100 shares of IBM stock, Enron would divide each share into two parts, one called a "control interest" and one called an "economic interest." Then it would sell the economic interest to a newly created special-purpose vehicle.

They want to know whether the vehicles' goosing of Enron's financial statements was a side effect or their sole purpose. One good clue is the list:

The decline in Enron’s profits led to its managers adopting special techniques some of them questionable to boost profits in the published accounts. Enron is alleged to have specifically mis-stated the profits from asset sales as trading gains. The temptation to fudge accounts inevitably increased with the pressure on management to sustain high profit figures.

Some topics in this essay:
Global Finance, Kenneth Lay, Skilling Lay, Enron Post-Enron, Enron Unlike, Skilling Enron's, Arthur Andersen, Power Indian, Consider Enron’s, , enron shares, enron's financial, share price, financial statements, equity partners, enron's financial statements, stock enron, enron didn't, outside equity partners, salary bonus, 100 shares, credit rating, granting stock options,