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Tag: securities law

  • Enron Fast Facts | CNN

    Enron Fast Facts | CNN



    CNN
     — 

    Here’s a look at Enron, an energy trading company that collapsed after a massive accounting fraud scheme was revealed. Its 2001 bankruptcy filing was the largest in American history at the time. Estimated losses totaled $74 billion.

    Enron was ranked as America’s fifth largest company by Fortune magazine in 2002, despite its 2001 bankruptcy filing.

    An independent review published in 2002 detailed how executives pocketed millions of dollars from complex, off-the-books partnerships while reporting inflated profits to shareholders.

    Executives including Kenneth Lay and Jeffrey Skilling were prosecuted for fraud-related crimes.

    Key figures sold their stock shortly before the company announced a sharp downturn in earnings.

    Lower-level employees were encouraged to invest in company stock for their retirement savings just before the company collapsed. The workers later filed a class action lawsuit and won an $85 million settlement.

    1985 – Houston Natural Gas merges with Omaha-based InterNorth to form Enron.

    1986 – Lay is appointed chairman and CEO of Enron.

    1989 – Enron enters the natural gas commodities trading market.

    1990 – Skilling, an energy consultant, is hired to run a new subsidiary called Enron Finance Corp.

    February 12, 2001 – Skilling becomes CEO while Lay stays on as chairman.

    August 14, 2001 – Skilling resigns and Lay becomes CEO again.

    August 2001 – Sherron Watkins, a vice president, warns Lay that the company could “implode in a wave of accounting scandals.”

    October 16, 2001 – Enron announces a third-quarter loss of $618 million. The company later reveals that it overstated earnings dating back to 1997.

    October 31, 2001 – The company discloses that it is under formal investigation by the Securities and Exchange Commission.

    November 9, 2001 – Enron confirms that it has agreed to be purchased by a rival company, Dynegy for $9 billion. On November 28, Dynegy announces it has terminated merger talks with Enron.

    December 2, 2001 – Enron files for Chapter 11 bankruptcy protection.

    January 9, 2002 – The US Department of Justice opens a criminal investigation into Enron’s collapse.

    January 10, 2002 – Arthur Andersen LLP, the accounting firm that handled Enron’s audits, discloses that its employees had destroyed company documents.

    January 15, 2002 – The New York Stock Exchange suspends trading of Enron shares.

    January 17, 2002 – Enron ends its partnership with Arthur Andersen.

    January 23, 2002 – Lay resigns as CEO. He later steps down from the board of directors.

    January 25, 2002 – Former Enron vice chairman J. Clifford Baxter is found dead in an apparent suicide.

    February 12, 2002 – Lay invokes his Fifth Amendment right before the Senate Commerce Committee.

    March 14, 2002 – The DOJ indicts Arthur Andersen for obstruction of justice. A jury later returns a guilty verdict for the accounting firm. The Supreme Court later overturns the conviction.

    February 19, 2004 – Skilling is charged with 35 counts of fraud and insider trading. He pleads not guilty.

    July 7, 2004 – Lay is indicted. He is charged with conspiracy, securities fraud, wire fraud, bank fraud and making false statements. During his arraignment the next day, he pleads not guilty to all 11 charges and is released on $500,000 unsecured bond.

    May 25, 2006 – Skilling and Lay are convicted of conspiracy and fraud. Skilling is also convicted on one count of insider trading and five counts of making false statements. The jury acquits Skilling on nine additional counts of insider trading.

    July 5, 2006 – Lay dies of a heart attack while awaiting sentencing.

    September 8, 2008 – A class action lawsuit filed by shareholders and investors is settled in federal court. The $7.2 billion settlement will be paid out by a group of banks accused of participating in the accounting fraud scheme.

    May 11, 2009 – Skilling files a petition with the Supreme Court to overturn his conviction after appeals with the lower courts fail.

    May 9, 2010 – “Enron,” a musical about the company’s collapse, closes on Broadway 12 days after opening amid slow ticket sales.

    April 16, 2012 – The Supreme Court rejects Skilling’s appeal.

    June 21, 2013 – A federal judge reduces Skilling’s sentence by more than 10 years. In return, Skilling agrees to stop challenging his conviction and forfeit roughly $42 million that will be distributed among the victims of the Enron fraud.

    December 8, 2015 – The SEC announces that it has obtained a summary judgment against Skilling, permanently barring him from serving as an officer or director of a publicly held company. The judgment settles a long-running civil suit by the SEC.

    February 21, 2019 – Skilling is released after serving over 12 years in federal prison.

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  • Angry lawmakers accuse Fed of inaction in insider trading investigation | CNN Business

    Angry lawmakers accuse Fed of inaction in insider trading investigation | CNN Business



    CNN
     — 

    Congressional lawmakers grilled Federal Reserve Inspector General Mark Bialek Wednesday over possible insider trading among Fed officials in 2020, accusing the nation’s central bank of inaction.

    The heads of the Boston and Dallas Federal Reserve banks retired early in 2021 after trades they made before and during the pandemic came to light. Bialek said his investigation into any potential legal violations from the trades is “ongoing.”

    A separate investigation by Bialek last year found no wrongdoing stemming from trades by a financial adviser on behalf of Fed Chair Jerome Powell’s family trust and by former Fed Vice Chair Richard Clarida.

    Bialek told members of a Senate Banking Subcommittee on Economic Policy that he was limited in what he could disclose because it would impede his ability to “conduct a thorough, independent investigation” into the former regional bank heads’ trades.

    Sen. Elizabeth Warren, D-Massachusetts, interrupted: “You have had a year and a half,” she said. “This is not strong oversight. In fact, it is not even competent oversight.”

    As Republican and Democratic lawmakers on the subcommittee pointed out, Bialek, who has served in his role since 2011, is appointed by members of the Fed’s Board of Governors, whom he is tasked with investigating. Bialek told lawmakers there was no conflict of interest and that he was still able to conduct fair, independent investigations. Warren, among others, said she was unconvinced.

    “It looks like, to anyone in the public, that you gave your boss a free pass,” she said. “The Fed continues to stonewall Congress, stonewall the public on the underlying information about these trades. This is not acceptable.”

    The Office of Inspector General declined to comment Wednesday night.

    After Silicon Valley Bank collapsed in March, Warren and Republican Sen. Rick Scott of Florida introduced a bill to require a presidentially appointed, Senate-confirmed inspector general to the Fed Board of Governors.

    A separate Fed investigation into SVB’s collapse, not involving Bialek, faulted Fed supervisors. Scott on Wednesday said he lacked confidence in Bialek’s ability to investigate those Fed supervisory lapses.

    “Somebody at the Federal Reserve that was responsible for these banks for supervision clearly did it wrong,” he said Wednesday, referring to bank collapses since 2008. “The average person in America pays for all this.”

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  • Hong Kong finds 90-year-old cardinal guilty over pro-democracy protest fund | CNN

    Hong Kong finds 90-year-old cardinal guilty over pro-democracy protest fund | CNN


    Hong Kong
    CNN
     — 

    A 90-year-old former bishop and outspoken critic of China’s ruling Communist Party was found guilty Friday on a charge relating to his role in a relief fund for Hong Kong’s pro-democracy protests in 2019.

    Cardinal Joseph Zen and five others, including the Cantopop singer Denise Ho, contravened the Societies Ordinance by failing to register the now-defunct “612 Humanitarian Relief Fund” that was partly used to pay protesters’ legal and medical fees, the West Kowloon Magistrates’ Courts ruled.

    The silver-haired cardinal, who appeared in court with a walking stick, and his co-defendants had all denied the charge.

    The case is considered a marker of political freedom in Hong Kong during an ongoing crackdown on the pro-democracy movement, and comes at a sensitive time for the Vatican, which is preparing to renew a controversial deal with Beijing over the appointment of bishops in China.

    Outside the court, Zen told reporters that he hoped people wouldn’t link his conviction to religious freedom.

    “I saw many people overseas are concerned about a cardinal being arrested. It is not related to religious freedom. I am part of the fund. (Hong Kong) has not seen damage (to) its religious freedom,” Zen said.

    Zen and four other trustees of the fund – singer Ho, barrister Margaret Ng, scholar Hui Po Keung, and politician Cyd Ho – were sentenced to fines of HK$4,000 ($510) each.

    A sixth defendant, Sze Ching-wee, who was the fund’s secretary, was fined HK$2,500 ($320).

    All had initially been charged under the controversial Beijing-backed national security law for colluding with foreign forces, which carries a maximum penalty of life imprisonment. Those charges were dropped and they instead faced a lesser charge under the Societies Ordinance, a century-old colonial-era law punishable with fines of up to HK$10,000 ($1,274) but not jail time for first-time offenders.

    The court heard in September that the legal fund raised the equivalent of $34.4 million through 100,000 deposits.

    In addition to providing financial aid to protesters, the fund was also used to sponsor pro-democracy rallies, such as paying for audio equipment used in 2019 during street protests to resist Beijing’s tightening grip.

    Although Zen and the other five defendants were spared from being charged under the national security law, the legislation imposed by Beijing over Hong Kong in June 2020 in a bid to quell the protests has repeatedly been used to curb dissent.

    Since the imposition of the law, most of the city’s prominent pro-democracy figures have either been arrested or gone into exile, while several independent media outlets and non-government organizations have been shuttered.

    The Hong Kong government has repeatedly denied criticism that the law – which criminalizes acts of secession, subversion, terrorism, and collusion with foreign forces – has stifled freedoms, claiming instead it has restored order in the city after the 2019 protest movement.

    Hong Kong’s prosecution of one of Asia’s most senior clergyman has cast the relationship between Beijing and the Holy See into sharp focus.

    Zen has strongly opposed a controversial agreement struck in 2018 between the Vatican and China over the appointment of bishops. Previously both sides had demanded the final say on bishop appointments in mainland China, where religious activities are heavily monitored and sometimes banned.

    Born to Catholic parents in Shanghai in 1932, Zen fled to Hong Kong with his family to escape looming Communist rule as a teenager. He was ordained as a priest in 1961 and made Bishop of Hong Kong in 2002, before retiring in 2009.

    Known as the “conscience of Hong Kong” among his supporters, Zen has long been a prominent advocate for democracy, human rights and religious freedom. He has been on the front lines of some of the city’s most important protests, from the mass rally against national security legislation in 2003 to the “Umbrella Movement” demanding universal suffrage in 2014.

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