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Non-Tech : The ENRON Scandal -- Ignore unavailable to you. Want to Upgrade?

To: Baldur Fjvlnisson who wrote (3310)	3/10/2002 7:33:06 PM
From: Mephisto	Read Replies (2) \| Respond to of 5185

Baldur, good article. Investors can't count on SEC for help. Also, it is worth noting that Bush has limited The Freedom of Information Act or he plans on doing so which would make it harder for investors to get information. See: Message 17179063 "In Enron's case, outright fraud was used to bury losses and manufacture phony profits. Laws already on the books will be used to prosecute the guilty parties. Therefore, no additional regulation is necessary to put guilty parties in jail. Indeed, it can be argued that existing regulatory agencies are not competent to detect fraud anyway. The crooks at Enron were caught, not by the SEC, but by hedge fund manager James Chanos. He read the company's financial reports and immediately realized that they were deceptive. The profit motive led him to short the shares and make a profit from exposing company chicanery. In contrast, the SEC failed to act for years, even though it had the exact same information as Mr. Chanos, if not more. The agency failed to review Enron's public filings for four years, complaining that they were too complicated to understand. Under the Public Utility Holding Company Act, Enron was required to provide the SEC details of its various investments, holding companies, and off-balance sheet financing transactions This law was mysteriously waived by the SEC in 1994, one of the many government mishaps that prevented discovery of Enron's fraudulent practices. Those who desired information about Enron's regulatory disclosures would also find themselves stymied by the SEC's bizarre administrative procedures. The agency has voluminous files containing correspondence between companies and SEC accountants. This paperwork may contain material information concerning questions the SEC had about the aggressiveness of corporate accounting representations. Yet investors do not have ready access to this data. In order to see it, they have to file cumbersome Freedom of Information Act requests. Then, they must wait patiently for months on end as the bureaucracy processes paperwork." Above excerpt from: "Enron and Greenspan's Bubble " by James M. Sheehan [Posted March 1, 2002] mises.org.