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Gold/Mining/Energy : Enron - Natural Gas Industry -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (308)	10/30/2001 4:06:53 PM
From: opalapril	Read Replies (1) \| Respond to of 1433

News hinting multiple indictments are on their way. The partnerships were playing with derivatives while the shareholders were paying for it! The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, promulgated thereunder, by issuing materially false and misleading statements during the Class Period that had the effect of artificially inflating the market price of the Company's Preferred Securities. Specifically, the complaint alleges that Enron issued a series of statements concerning its business, financial results and operations which failed to disclose among other things that: (1) on or about June 1, 1999, the Company began entering into a series of extraordinarily leveraged investment and hedging transactions with a group of limited partnerships which were controlled by the then-Chief Financial Officer Andrew S. Fastow. Enron did not publicly disclose the details of these transactions, the material change in its investment and hedging strategy as represented by these transactions, the material increase in the degree of leverage and the business and investment risk with respect to these transactions, and generally, or that these transactions could lead to billions of dollars in borrowings and writedowns of shareholders' equity, which would jeopardize the value of Enron's Preferred Securities; (2) Enron was failure to write-down impaired assets on a timely basis in accordance with GAAP; and (3) the Company's operating results were materially overstated as a result of the Company's failing to timely write-down the value of its investments with certain limited partnerships, including those described above. On October 16, 2001, Enron surprised the market by announcing that in the third quarter of 2001, the Company was taking non-recurring charges of $1.01 billion after tax ($1.11 per diluted share). Enron failed to clearly disclose until October 18 that it also was taking a $1.2 billion writedown in shareholders' equity as a result of unwinding the investments with the limited partnerships controlled by Mr. Fastow. Since the announcement of the $1.2 billion writedown in shareholders' equity, the market price of Enron Preferred Securities has dropped significantly.