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To: Sully- who wrote (50418)	4/23/2002 2:31:56 PM
From: stockman_scott	Respond to of 65232

Some cartoons on The Middle East... jewishworldreview.com jewishworldreview.com seattlepi.nwsource.com seattlepi.nwsource.com seattlepi.nwsource.com

To: Sully- who wrote (50418)	4/24/2002 12:10:39 AM
From: stockman_scott	Respond to of 65232

U.S. probing stock analysts Criminal charges could be filed if conflicts found By Rex Nutting, CBS.MarketWatch.com Last Update: 6:36 PM ET April 23, 2002 WASHINGTON (CBS.MW) -- The Justice Department is looking at Wall Street's stock analysts for possible conflicts of interest in their ratings and recommendations. Michael Chertoff, head of the criminal division, told Bloomberg News that criminal charges are possible if investigators find that research analysts tilted their "buy" and "hold" recommendations to help their firms win investment-banking business. "We're going to be doing a lot of cases involving financial reporting," Chertoff told Bloomberg. "The way they disseminate and handle the information of publicly traded companies seems to me to be one of the front-burner white-collar enforcement issues for the next several years.'' Bryan Sierra, a spokesman for the Justice Department, said "Financial reporting, including the work of financial analysts, is on the radar screen." He added, however, that "We're not investigating anything yet." "The department needs to look at it to see if further investigation is needed," Sierra said. He said the preliminary probe was sparked by its investigation into Enron (ENRNQ: news, chart, profile) as well as press reports and other allegations that have surfaced. State securities regulators said Tuesday they would form a multi-state task force to look into the analysts' recommendations, following the lead of New York Attorney General Eliot Spitzer, who charged Merrill Lynch (MER: news, chart, profile) with giving self-serving and misleading advice. Spitzer has reportedly subpoenaed records from other top Wall Street firms, including Credit Suisse First Boston, Morgan Stanley, Goldman Sachs, Salomon, UBS PaineWebber, and Lehman Brothers Merrill has agreed to greater disclosure of its possible conflicts as it tries to settle the New York charges, hoping to avoid a $100 million fine. See full story. Spitzer released damaging internal e-mails from superstar Internet analyst Henry Blodget and others in which the analysts trashed the same stocks they were recommending as bargains. Following the collapse of the dot-coms and Enron's bankruptcy, regulators and shareholders have been demanding that Wall Street firms separate their research from their other businesses to avoid conflicts of interest. Merrill and other firms have been hit with shareholder suits, alleging that the brokers knew recommended stocks were really junk. The stock exchanges, the Securities and Exchange Commission and the Securities Industry Association have all called for strengthening the "Chinese Wall" between research analysts and investment bankers. Additionally, there have also been calls in Congress to tighten securities laws to eliminate the temptation analysts feel to recommend companies that do business with their firm. Spitzer is scheduled Wednesday to ask the House Financial Services Committee to back just such a regulatory measure requiring brokerages to accompany analysts' ratings with disclosure about investment bank services that the rated company has paid for. Rex Nutting is Washington bureau chief of CBS.MarketWatch.com.

To: Sully- who wrote (50418)	4/24/2002 12:27:25 AM
From: stockman_scott	Respond to of 65232

Is There Anything Enron Didn't Do? As the Enron debacle has unfolded, it's become clear that the energy company operated in many ways like an investment bank. Now it turns out that Enron was an investment bank. FORTUNE Tuesday, April 16, 2002 By Peter Elkind and Bethany McLean As the Enron debacle has unfolded, it's become clear that the energy company operated in many ways like an investment bank. Now it turns out that Enron was an investment bank. From 1994 until late last year, FORTUNE has learned, Enron quietly operated a subsidiary called ECT Securities, a branch of Enron Capital & Trade Resources, launched by former CEO Jeffrey Skilling. The division registered with the SEC as a securities dealer to "conduct business as an investment-banking firm"--structuring M&A deals, underwriting debt and equity offerings, and even doing financial advisory work. Toward that end, more than a dozen Enron executives obtained broker's licenses--including Rick Buy, Enron's chief risk officer, who served as ECT Securities' president; Michael Kopper, the Andrew Fastow deputy who ran the infamous LJM2 partnership; Ray Bowen, now Enron's CFO; and even whistle-blower Sherron Watkins. There is no evidence that anyone at Enron got rich from their work as in-house investment bankers at ECT Securities. Those familiar with the venture say it was intended to capture fees from public and private offerings on Enron-related investments, including some involving the off-balance-sheet JEDI partnership. Indeed, most of the operation's income emanated from related-party "structuring fees." Revenue peaked at $30.4 million in 1998--$28 million from structuring fees, $1.5 million from interest income, and $938,159 from underwriting--and dropped to $8.3 million in 2000. It is also clear that ECT Securities was involved in some of Enron's disastrous investments, including a $650 million project to redevelop a steel mill in Chonburi, Thailand, operated by a Thai company known as NSM. Enron had multiple--and, arguably, conflicting--positions in the deal. Intending to both help finance the mill's expansion and build a co-generation facility next door to recapture energy from its operations, Enron bought 52 million shares of NSM stock, took a seat on the NSM board, and swallowed at least $20 million in NSM debt. ECT Securities also served as co-manager of a private $452 million NSM junk bond offering. NSM went bankrupt without ever completing the project. "Much of the money went to places unknown and unaccountable," says one attorney familiar with the deal. Bondholders, including IDS and Legg Mason, filed nine fraud suits against the project's backers. But while naming the other underwriters, most of the big-name plaintiffs, including Merrill Lynch, conspicuously eschewed naming Enron or ECT Securities as a defendant. The explanation, according to the attorney: "They had other relationships with Enron." fortune.com