UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18849 / August 25, 2004
Accounting and Auditing Enforcement Release No. 2088 / August 25, 2004
Securities and Exchange Commission v. Mark E. Koenig, Civil Action No. H-04-3370 (SDTX)
SEC Charges Mark E. Koenig, Former Executive Vice-President and Director of Investor Relations at Enron
Defendant Barred from Serving as Officer or Director of Public Company and Agrees to Pay $1.49 Million; Will Cooperate with Government Investigations
The Securities and Exchange Commission today charged Mark E. Koenig, a former Executive Vice-President and Director of Investor Relations at Enron Corp., with violating the antifraud provisions of the federal securities laws. Without admitting or denying the allegations of the Complaint, Koenig has agreed to be enjoined permanently from violating Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, and to be barred from acting as an officer or director of a public company. As part of the settlement agreement, which is subject to the approval of the U.S. District Court, Koenig will pay disgorgement and a civil penalty totaling $1,493,572. The Commission brought this action in coordination with the U.S. Department of Justice Enron Task Force, which filed a related criminal charge against Koenig. Koenig agreed to enter into a guilty plea in connection with that charge and to cooperate with the government's continuing investigation.
As alleged in the Complaint, Koenig participated in a scheme to defraud in violation of the federal securities laws when he disseminated, and approved the dissemination of, false and misleading information to the public about Enron's business in earnings releases and analyst calls.
Specifically, the Commission's Complaint alleges that in his role as Executive Vice-President and Director of Investor Relations, Koenig was responsible for drafting and preparing portions of Enron's earnings releases and analyst call scripts. Koenig reviewed and edited Enron's First, Second and Third Quarter 2001 earnings releases, and scripts for the March 23, 2001 Analyst Call and the First, Second and Third Quarter 2001 Analyst Calls. During his efforts, Koenig learned specific information about Enron's retail energy business unit, Enron Energy Service (EES), and its telecommunications business unit, Enron Broadband Services (EBS), revealing that EES and EBS were not the successful business units described in the earnings releases and scripts, and as described by Enron in the analyst calls. Nevertheless, Koenig did not correct the false and misleading information provided to analysts and investors in the earnings releases and analyst calls, and affirmatively made false and misleading statements about these two businesses during the calls.
The Commission's investigation is continuing.