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Enron and Bear Stearns

Arthur Andersen misrepresented Enron’s statement, got tried for document destruction, and later was exonerated by the Supreme Court.
Meanwhile all 85,000 employees had to find new jobs.

The partners and principals in the KPMG tax shelter case got heaved overboard after no doubt receiving bonuses for
selling tax shelters. KPMG paid a hefty non deductible fine of $450 M and was barred from even paying the legal fees for the
accused. That last action was just overturned. Interestingly KPMG was never convicted of anything.

Now we have Bear Stearns who claims to be an investment banker who managed to lose not just some but all of the money
in two of their so called hedge funds. Did anyone lose their job, did anyone get fined, even the stock price has not suffered much.

Gee shouldn’t someone at Bear be headed out the door, if not to jail? No doubt Jeff Skilling is wondering from his jail cell
what the difference is between worthless Enron stock and a B. S. (interesting abbreviation don’t you think) hedge fund?

My point is that Skillng got a long jail term, Mr. Fastow got ten years, Ms. Fastow got one year,
yet Bear Stearrns also lost 100% of inveator money and kept the commissions!

This is justice?

Readers, please sound off on this one!

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2 responses to “Enron and Bear Stearns”

  1. Lupe B Avatar
    Lupe B

    Well, wouldn’t this call for some kind of regulation? I think the difference between BS and Enron is that no one wants to call for regulating hedge funds as much as they do for corporations. Didn’t they already try that before? It doesn’t seem fair but there’s just too big of a return in hedge funds, if the deals pay out. Regulation would only get in the way of big money….atleast that’s what I think.

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  2. Dennis Elam Avatar
    Dennis Elam

    Guadalupe certainly put her finger on the current thinking among hedge funds, regulation would only get in the way of big money. After all Chelsea Clinton works for one, John Edwards worked with one, and they are big campaign contributors since after all theyhave lots of money to contribute and lots of self interest to protect. But my point was,
    Lay Skiling and Fastow all claimed they were out to make money in new ways for shareholders, as do hedge funds. And the defense of Enron was that it was all legal, the best CPA and Law firms said so, so if it was,
    how is Enron and say, Long Term Capital Management different? Greenspan made the cover of Time Magazine a few years back as one of three guys who saved the world, or more specifically, they saved a finanical meltdown resulting form the shenanigans of LTCM. It is only a matter of time before the wild antics of off exchange derivative plays, read Bear Stearns Mortgage funds, not only go broke but threaten to take the markets with them when they can’t meet their obligations. Studies after the 1987 crash showed for example that so called portfolio insurance actually exacerbated the crash that day, rather than slowing it.
    Trust me, this past week was a sneak preview of things to come, brokerage firms were citing circuit breakers et al on thursday and we only had a 2-3% move down. If Barry Minkow of ZZZZ Best can help CPAs avoid audit disasters, maybe we should think about supervised probation for Skilling and Fastow, now before things get worse and they might actually anticipate a few things.

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