Litigation Release No. 19996 / February 9, 2007

Accounting and Auditing Enforcement Release No. 2552 / February 9, 2007

Securities and Exchange Commission v. Richard A. Causey, Civil Action No. H-04-0284 (Harmon) (S.D. Tex.)

SEC Settles Civil Fraud Charges Filed Against Richard A. Causey, Former Enron Chief Accounting Officer

Causey Barred From Acting as an Officer or Director of a Public Company

The Securities and Exchange Commission ("Commission") announced today that, on February 8, 2007, the U.S. District Court in Houston entered a final judgment in the Commission's civil action against Richard A. Causey, Enron's former Chief Accounting Officer. In its complaint filed on January 22, 2004, the Commission alleged that Causey, along with others, engaged in a wide-ranging scheme to manipulate Enron's publicly-reported earnings through a variety of devices designed to produce materially false and misleading financial results. Causey consented to the final judgment without admitting or denying the allegations in the Commission's complaint. He has agreed to be enjoined permanently from violating the antifraud, periodic reporting, books and records, and internal control provisions of the federal securities laws, and to be barred permanently from acting as an officer or director of a public company. Causey previously entered into a guilty plea on related criminal charges and was sentenced to 66 months in prison. As part of his criminal plea, Causey agreed to forfeit a total of $1.5 million and to cooperate with the ongoing investigations being conducted by the Commission and the Justice Department's Enron Task Force.

As alleged in the Commission's complaint, Causey and others fraudulently manipulated Enron's merchant asset portfolio; improperly used "off-balance-sheet" special purpose entities; manipulated Enron's "business segment reporting" to conceal losses at Enron's retail energy business, Enron Energy Services; manipulated expenses to conceal losses at Enron's broadband unit, Enron Broadband Services; and manipulated reserves in Enron's wholesale energy trading business to conceal earnings volatility and losses. The complaint also alleged that Causey and others made false and misleading statements concerning Enron's financial results and the performance of its businesses, and that these misrepresentations were reflected in Enron's public filings with the Commission.

In settlement of this action, Causey also consented to the entry of an Administrative Order, pursuant to Rule 102(e) of the Commission's Rules of Practice, barring him from appearing or practicing before the Commission as an accountant.

The Commission acknowledges the assistance of the U.S. Department of Justice.

For additional information see Litigation Release No. 18551, January 22, 2004.