Speech by SEC Staff:
Statement Regarding SEC Action Against Ex-Enron Officer Jeffrey K. Skilling
Stephen M. Cutler
Director, Division of Enforcement
U.S. Securities & Exchange Commission
February 19, 2004
The Securities and Exchange Commission, in close cooperation with the Justice Department's Enron Task Force, has devoted thousands and thousands of hours to investigating and deconstructing the complex, multi-faceted and numerous corporate abuses that occurred at Enron. Today's enforcement action against Jeff Skilling is a very significant milestone in that effort.
Mr. Skilling was quick to take credit for the "innovations" behind Enron's spectacular rise and its apparent transformation into a "new economy" powerhouse. He was also quick to take credit for putting in place the corporate culture that made these "innovations" possible.
Of course, many of these so-called "innovations" were, in truth, nothing more than fraudulent business practices.
And, when Mr. Skilling realized that the fraud he had perpetrated was no longer sustainable, he was just as quick to abandon Enron, to sell massive amounts of his Enron stock, and to disclaim responsibility for the harms visited on Enron's shareholders.
In this scandal as in others, we are by now all too familiar with the phenomenon of executives who put themselves at the center of what would appear to be great corporate achievements, but who then loudly proclaim their ignorance when the appearance of success gives way to the reality of corruption. Let there be no mistake that today's enforcement action against Mr. Skilling places accountability exactly where it belongs.
The Commission's complaint, filed this morning, charges Mr. Skilling with violating the federal securities laws. The complaint alleges that Mr. Skilling shares responsibility for the conduct underlying Enron's fraudulent financials, that he lied to Enron's auditors to conceal the fraud, and that he sold millions of dollars of his Enron stock before the fraud was discovered and the stock became worthless.
The Commission will ask the court to permanently enjoin Mr. Skilling from violating the federal securities laws in the future, to bar him permanently from acting as an officer or director of a public company, to order him to disgorge his ill-gotten gains, and to impose civil money penalties.
No matter how comprehensive our laws and regulations, there will always be individuals who believe - whether because of arrogance, greed or a failure of integrity - that the rules do not apply to them or that they won't get caught if they break them. As our enforcement efforts in the Enron matter reflect, these individuals should think again.
In the last 2-1/2 years, the Securities and Exchange Commission - working in close coordination with the Enron Task Force - has systematically tracked down those responsible for the Enron debacle and have called them to answer for their conduct. In the twelve enforcement actions the SEC has filed to date, those charged now include Enron's former President and Chief Executive Officer, its former Chief Accounting Officer, its former Chief Financial Officer, its former Treasurer, and ten other senior executives of various Enron operating divisions.
The Commission has also charged several of the world's largest financial institutions that knowingly entered into fraudulent transactions with Enron, and thereby enabled the company to misstate its reported financial results.
As a result of all of these efforts, the Commission has recovered more than $400 million for the benefit of the investors harmed by the fraud.
The Commission will continue to investigate until it has identified all of the culpable parties in the Enron fraud, whether they are insiders like Mr. Skilling or outsiders who lent a helping hand.
I want to recognize and applaud the splendid work of the United States Department of Justice and the FBI on this matter, including Deputy Attorney General Jim Comey, FBI Director Robert Mueller, Assistant Attorney General Chris Wray, and Leslie Caldwell, Andrew Weissman and the entire Enron Task Force. I thank you all for your incredible efforts and the true partnership between you and the SEC in fighting corporate fraud. And lastly, I wish to thank Linda Thomsen and Charles Clark of the SEC, who have tirelessly and expertly spearheaded the Commission's efforts that have resulted in today's case.