Yep again.

Post #43,667 by bepatient 6/27/02 2:33:19 PM Reply	Yep again. I expect that at some point we'll see a conviction of someone from Enron. Probably on obstruction charges. Remember, though...that while crooked as hell...what Enron was doing was perfectly acceptable under the law (for the most part). What you would have to prosecute on would be the "reasonable assumption of risk" language that surrounds the reporting of investment income. With the right jury they might be able to get that to stick...maybe. Same with Global Crossing. They were selling and repurchasing the same product in different periods to up their (false) revenue figures. Legal...but not at all ethical. Those are the loopholes I mentioned that should be closed. You were born...and so you're free...so Happy Birthday! _{Laurie Anderson} [link\|mailto:bepatient@aol.com\|BePatient]
Post #43,680 by Simon_Jester 6/27/02 4:18:29 PM Reply	Yes and no.. Remember, though...that while crooked as hell...what Enron was doing was perfectly acceptable under the law (for the most part). What you would have to prosecute on would be the "reasonable assumption of risk" language that surrounds the reporting of investment income. Yes and no. The selling of resources to other pseudo-companies appears to be fairly legal, however the transfer of debt to other companies (that were basically extensions of Enron itself) and then not reporting same said debt (of held companies) seemed to questionable to a number of accountants/legal experts, iirc.
Post #43,681 by bepatient 6/27/02 4:29:25 PM Reply	The issue.. [link\|http://www.brook.edu/comm/policybriefs/pb97.htm\|url] The immediate accounting problem exposed by Enron's failure was the weak consolidation rule prescribed for highly leveraged "special purpose entities" (SPEs), or partnerships that were formed to carry out various projects whose assets and liabilities were not shown in Enron's balance sheet. Enron failed in part because of losses arising out of the many SPEs that it had created. The rule for some time has been that sponsors of an SPE need not consolidate it so long as outside investors contribute a majority of its capital and that investment constitutes at least 3 percent of the SPE's assets. Leaving aside the fact that Enron appears to have misled its auditor, Andersen, about the amount of outside investments in SPEs (thus wrongfully avoiding consolidation), it is now clear that the 3 percent test was much too weak. FASB has since rightly raised the threshold to 10 percent. Guess you're right in that there was a little bit of both going on. Still...there should be a full disclosure requirement, regardless of investement. The companies liability needs to be recognized and reported. You were born...and so you're free...so Happy Birthday! _{Laurie Anderson} [link\|mailto:bepatient@aol.com\|BePatient]

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