U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19063 / February 7, 2005
Accounting and Auditing Enforcement
Release No. 2179 / February 7, 2005
Securities and Exchange Commission v. Raymond M. Bowen, Jr., Civil Action No. H-05-00384 (SDTX) (February 7, 2005)
SEC CHARGES FORMER ENRON EXECUTIVE RAYMOND M. BOWEN, JR. WITH VIOLATING FEDERAL SECURITIES LAWS
Defendant Barred From Serving As Officer Or Director of Public Company for Five Years and Ordered to Pay $500,000
The Securities and Exchange Commission today charged Raymond M. Bowen, Jr. with violating the antifraud provisions of the federal securities laws and for aiding and abetting Enron's violations of the reporting and record keeping provisions. As alleged in the Complaint, Bowen knew or was reckless in not knowing of a scheme to manipulate Enron's publicly-reported earnings through a variety of devices designed to produce materially false and misleading financial results, including the overvaluation of Enron's "merchant" investments in energy and technology companies. Bowen has agreed to a permanent injunction and to be barred from acting as an officer or director of a public company for five years. As part of the settlement agreement, which is subject to the approval of the U.S. District Court, Bowen will pay nominal disgorgement of $100 and a civil penalty of $499,900.
Specifically, the Commission's Complaint alleges the following: Bowen, while serving as managing director of Enron North America (ENA) and co-head of its commercial transactions group, had oversight responsibilities regarding portions of ENA's merchant portfolio during the second and part of the third quarters of 2000, and knew or was reckless in not knowing that the merchant portfolio was materially overvalued on Enron's books. Bowen also was aware that certain assets were hedged by special purpose entities (SPEs), and knew or was reckless in not knowing that the SPEs did not provide a true economic hedge, and were used to manipulate Enron's financial statements. Bowen knew or was reckless in not knowing that a $100 million increase to the book value of Enron's largest merchant asset, Mariner Energy, Inc., was recorded in the fourth quarter of 2000 to generate fictitious mark-to-market earnings sufficient to meet Enron's targets.
Bowen 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 from aiding and abetting the violation of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 13a-13. Bowen consented to the entry of Final Judgment by the Court without admitting or denying the allegations of the Complaint.
The Commission acknowledges the assistance of the U.S. Department of Justice Enron Task Force. The Commission's investigation is continuing as to others.
SEC Complaint in this matter