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Non-Tech : Auric Goldfinger's Short List -- Ignore unavailable to you. Want to Upgrade?

To: mmmary who wrote (9659)	4/15/2002 9:13:28 PM
From: StockDung	Respond to of 19428

Dirks & Company, Inc. (CRD #42185, New York, New York) submitted a Letter of Acceptance, Waiver, and Consent in which the firm was censured, fined $18,000, and required to revise its written supervisory procedures with respect to the firm quote rules. Without admitting or denying the allegations, the firm consented to the described sanctions and to the entry of findings that, as a registered market maker in securities, it failed to execute orders presented at the firm's published bid or published offer in an amount up to its published quotation size, and upon presentment, failed to honor its published quotation. The findings also stated that it failed, within 90 seconds after execution, to transmit through ACT, last sale reports of transactions in Nasdaq National Market (NNM), Nasdaq SmallCap,SM and OTC Equity securities, and failed to designate through ACT such last sale reports as late; failed to designate as ".T" through ACT last sale reports of transactions in NNM and OTC Equity securities executed outside normal market hours; and failed, within 90 seconds after execution, to transmit through ACT last sale reports. Furthermore, the NASD determined that the firm did not provide for supervision reasonably designed to achieve compliance with respect to firm quote rules. Specifically, the firm's supervisory system did not include written supervisory procedures providing for the identification of the person responsible at the firm to ensure compliance with the firm quote rules; a statement of the steps that such person should take to ensure compliance; a statement as to how often such person should take such steps; and a statement as to how enforcement of such written supervisory procedures should be documented at the firm. (NASD Case #CMS020019) nasdr.com

To: mmmary who wrote (9659)	4/16/2002 1:45:46 PM
From: StockDung	Read Replies (2) \| Respond to of 19428

"allowed Enron to repay loans on the last day of a month and borrow again the next day." J.P. Morgan Asked By Congress to Explain Enron Loans (Update1) By Mark Lake New York, April 16 (Bloomberg) -- J.P. Morgan Chase & Co. helped Enron Corp. raise $1 billion in 1999 and 2000 in transactions that let the company avoid reporting loans as debt. Now, the bank is suing the bankrupt energy trader to recover the money and Congress is asking for explanations. J.P. Morgan arranged for at least four banks to provide funds to Enron through five partnerships, including one that allowed Enron to repay loans on the last day of a month and borrow again the next day. Rep. Henry Waxman, a California Democrat, charged yesterday the cycle gave Enron a way to portray the debt as satisfied when accounts were tallied at month's end. The House Energy and Commerce Committee is probing whether banks played a role in Enron's collapse. The committee last month asked 10 banks, including J.P. Morgan, Merrill Lynch & Co. and Citigroup Inc. about financing partnerships through which the company concealed debts and inflated earnings. J.P. Morgan's transactions ``do not appear to have served a legitimate economic purpose,'' Waxman wrote to the bank's chief executive, William B. Harrison Jr., in a letter released by Waxman's office. ``Rather, on their face, they appear to have been designed to allow Enron to covertly borrow hundreds of millions of dollars.'' Waxman asked Harrison whether the financing was structured to skirt debt-reporting requirements and to disclose how much money the lenders earned. Partnership Chain Spokeswoman Kristin Lemkau said J.P. Morgan worked with Enron to structure the financing and expected the company to include it in financial statements. J.P. Morgan shares rose 53 cents to $33.93. Enron shareholders last week sued J.P. Morgan, one of Enron's biggest lenders, and eight other banks, alleging they made billions of dollars for helping set up partnerships that were ``Ponzi schemes.'' J.P. Morgan declined comment on the suit. Three years ago, J.P. Morgan assembled a group of banks including Bank of America Corp., FleetBoston Financial Corp., BNP Paribas SA and Rabobank Groep to help Enron raise money through partnerships named after American Indian tribes. After Enron went bankrupt in December, J.P. Morgan sued to recover $2.1 billion -- the money the banks had extended plus funds committed by Enron. The banks and Enron declined comment. Money Trail According to the court papers, the banks began moving money to Enron with $485 million they advanced to Choctaw Investors, a Dutch company that shared an address with Rabobank and had no employees. Rabobank contributed $15 million to Choctaw as equity. Choctaw then used the $500 million to purchase the preferred equity of Cherokee Finance, a company whose principal place of business was listed at J.P. Morgan's Dublin office. Next, Cherokee lent $1.25 billion -- the $500 million advanced by the banks and $750 million contributed by Enron -- to Sequoia Financial Assets LLC. Sequoia is 96 percent-owned by Enron, according to Enron's 2001 annual report. Sequoia then gave the cash to Enron to purchase some of the company's accounts receivable, or uncollected bills. As those bills were paid, Sequoia returned most of the funds to Enron by purchasing the company's commercial paper, short-term unsecured debt used to finance day-to-day operations. Bookkeeping At the end of each month, Enron repaid Sequoia, which repaid Cherokee. On the first of the next month, Cherokee advanced the money again to Sequoia and Enron. The transactions were done as bookkeeping entries because Enron held custody of the money at all times, according to the court papers. ``Since balance sheets are generally prepared as of the end of the month, these series of transactions allowed Sequoia (and Enron) to avoid reporting the debt,'' Waxman wrote in his letter to Harrison. Lemkau said J.P. Morgan expected Enron to report the financing not as debt but as the value of a minority interest the banks had purchased in Cherokee Finance. ``This structure was designed to be on Enron's balance sheet as minority-interest financing,'' said Lemkau. Minority Interest Accounting experts said companies use the minority interest line on a balance sheet to account for investments in subsidiaries by third parties. Typically, the investors buy into operating businesses, not into companies designed solely as financing vehicles, the experts said. ``This is not the way that other companies use minority interest,'' said Kevin Stoklosa, who is heading a Financial Accounting Standards Boards study of how companies should account for instruments that have characteristics of liabilities and equity. Enron does not list Cherokee in its financial statements and the value of the minority interests included on the company's balance sheets does not match these transactions. ``As far as I can see, this financing clearly does not show up as debt,'' said Daniel Scotto, a former bond analyst with BNP Paribas. ``And it is highly questionable whether or not it is buried in the preferred stock or minority-interest account.'' The same banks lent $482 million to Zephyrus Investments LLC, a limited partnership. Zephyrus, in turn, advanced the money to Sequoia and Enron.