Pretty much agree with that, bigtexx. I'm sure lots of CEO's have been watching this trial VERY carefully. If the jury was trying to send a message, I'd say they did a pretty good job of that. And then some. To the accounting guru's here: Are there companies out there that are presently using the mark to market accounting method? If I understand it correctly, it basically allows you to book earnings based on projections instead of actual cash flow. Once Enron approved this method (which Skilling lobbyed hard for) that is when all of their shenanigans started. I just don't see how mark to market accounting could be legal.
Sam I beg to differ. We all know the impact that Sarbanes has had on how business is conducted, and I agree with you that there was a lot that changed in American business before this verdict was read. However, looking at the amount of prison time these guys are facing is something that every businessman is now looking at for these crimes. I think it solidifies the wave of corporate transparency that has been going on and puts it in very tangible, understandable terms: You do these things, you face a sh!tload of jail time. That will change the way people behave. This verdict provides closure and firms up any doubts that remain about the seriousness of these crimes. If the verdict would have been "not guilty", then businessmen would see that and think that it's not as big of a deal and you could still get off.
True enough. A reinforcement, as you say. But more of an exclamation mark to emphasize a change. A not guilty verdict would have sent a significantly different message. And Enron was the catalyst to these changes....so the conviction of the key Enron players is such a critical component. What's particularly sobering to some, I think, is that many company execs were likely guilty of similar 'embellishments' (quite possibly without malicious intentions) but as their companies did not suffer the colossal collapse of Enron, they were not subject to the same charges.
Not a bad post, bigtexxx, in the light of the outcome. However, if you could explain 1) why you think Skilling humiliated Senators during the Enron hearing and 2) what is your reason to put quotation marks around pundits, I would be more than willing to admit I was wrong to judge you unfairly.
I don't think there was much doubt to be shored up. Texxx, corporations themselves (and by that I mean BoD's and Senior management acting in the best interests thereof) got the biggest wake-up call when Enron itself dissolved. For a corporation itself, that was effectively the death penalty - there's no bigger deterrent to a corporation than that. The criminal conviction of Lay & Skilling on top of that (on top of the convictions of Ebbers (who is basically in jail for what amounts to life), Kozlowski, Adelphia guys, etc) is really just icing on the cake. Nevertheless, I will provide you with any updates should your thesis be realized. I can't think of any company or companies or CEO's that was/were waiting till an actual guilty verdict to come in on Lay, Skilling before they decided thatfraud was a bad idea. If you know of any I'd love to represent them as they would obviously generate a lot of business.
1) Skilling did in fact humiliate Senators during the Enron hearings. The guy is a freaking genius, and he completely showed up those Senators when they tried to talk about what he's smart about. That doesn't mean I was cheering for the guy. He used his smarts to do some truly awful things, and for that I don't respect him. I do respect his knowledge and business acumen, though. 2) You're reading WAY too much into the quotation marks around the word pundits. I put quotes around the word simply because I was looking for a better word, but could only come up with "pundits". The quotes do not equal scorn or negative connotations. I'm not even sure where you came up with that.
No. Even after the collapse of Enron, Skilling and Lay still had untold millions and could live the good life in their mansions. Executives saw that and still had a glimmer of hope if they wanted to fudge some numbers. This Enron trial has had much more visibility than the Sunbeam, Worldcom and Adelphia trials. This is the homerun for the government that really changes things.
I think the other key component of this verdict is that Lay's "I didn't know...I relied on my experts" defence didnt' fly.
Lay was teetering on the brink of insolvency. Skilling had squirelled enough away. This was documented in a Times article from some months ago. I think you presume the worst of corporate america if you think many CEO's looked at Skilling and Lay's current state of affairs as desirable. Such anti-rich pitchfork populism from you! When I say corporation, texxx, I'm talking about the legal entity, that is supposed to act in its own interests above that of the personal ones of its CEO's and officers and directors. Like I said, theoretically, the convictions of Lay & Skilling shouldn't matter to the corporation, only the spectacular demise of Enron should - and from what I can tell it did. Perhaps to the common man in the street, but not to company counsel, both internal and external, who has been giving very cautionary advice for years now, not without success either.
Good news. They were guilty, and were found guilty. I'm interested to see how they're sentenced though before I can consider this a case of justice being served. Anyone have any sort of clue about what the sentence will be? It is rather interesting that sentencing has been set for 9/11. I'd guess that was just a coincidence of scheduling, but still.
So you agree I was also prophetic in saying you would be happy about the verdict in the very first post of mine in this thread? OK being a man of my words, I admit I may have been reading too much into a couple of posts of yours thus was premature (probably wrong as well) to cast a negative cloud over you basing mostly on my prejudicial bias.
I'm no lawyer but they seem like a waste of time and money. I can't imagine getting anything out of them. They will have it so tucked away and hidden that it will never see the light of day.
I think CNN is reporting that the sentencing will be the week of Sept. 11th, not necessarily the very day. And bnb, guilty as charged!
Interesting analysis on the verdict. From my limited knowledge of the corporate world it seems like a lot of corporations weren't waiting for this verdict to start changing their practices in regard to profit reporting. Remember a whole host of corporations got in trouble with that very thing so Enron was just one of many. Jail time certainly punctuates things for executives but plummetting stock prices and bankruptcies had already convinced share holders and boards of the dangers of overstating earnings so after the Enron collapse they were already inclined to change. If this verdict had gone the other way and Lay and Skillings had been found innocent that would've had a huge impact on business practices but in terms of this being a watershed for businesses I think that was already reached a few years ago.
I agree. the sarbanes oxley that put higher standards on audits happened in 2002 right after the rash of enrons and worldcoms. I had the fortunate experience of working closely with a ceo of publicly traded company right after enron collasped and believe me full disclosure was on everyone's mind.
I think there should be an asterisk put next to all of Lay's and Skilling's TPS reports and their financial records should be stricken from the record. Plus blood testing. Lots of blood testing.
The analogy I read was that this was like the final exam for the government, being one of the most high profile and complicated cases. It would not have been inconceivable for Lay to beat some of the charges (even setting aside our conspiracy / partisanship theories). In that regard they aced the exam (pending appeal, of course).
Skilling nor Lay are geniuses...if they were they wouldn't be in this mess The oriental (Lu Pie) is sitting on 250 Million…he is the genius…he left at the right time.
