Thursday, May 25, 2006

ENRON CONVICTIONS -- "Enron former chief executive Jeffrey Skilling and founder Kenneth Lay were both found guilty Thursday of conspiracy and fraud in the granddaddy of all corporate fraud cases."

Prof. Bainbridge thoughts here. Two of his insights:
It's not the crime, it's the cover up. The real crimes at Enron mainly consisted of turncoat government witness Andrew Fastow's shady deals, but Skilling and, especially, Lay are going down for improperly misrepresenting Enron's fortunes."

One of the curious things about this case is the documented evidence that "a number of people were contradicting Enron's own rosy view of itself long before the middle of 2001." At what point does a lie by top management cease to matter if the market doesn't believe it? Presumably the government convinced the jury that people believed the lies Skilling and Lay told, but did the market really do so?

More here. It all boiled down to credibility.