NEW YORK – Were Enron insiders profiting as investors and employees were burning?
This summer, when Enron management was telling its employees business was great and Enron stock was flying high, CEO Ken Lay sold stock every single business day in the month of July. Only the 4th of July holiday slowed him down.
Today, new filings released by the U.S. Securities and Exchange Commission showed insiders continued to sell in early December when Enron shares were nearly worthless. A good sign that those in the know knew pretty quickly that once the accounting games stopped there wasn't any value there at all.
Today, in an effort to reassure nervous investors, SEC Chairman Harvey Pitt outlined his agenda in the wake of the Enron debacle. Pitt proposes that the SEC and the accounting industry work together to form a oversight group that would have authority to punish accountants for incompetence and ethical violations. Ironically, many in the accounting profession had opposed a self-regulation system until know.
Still, critics wonder whether the SEC plan has enough teeth, particularly because the SEC does not have the power to pursue criminal prosecutions.
And just when you think this Enron story can't get any worse, word late Thursday that New York City's pension fund has joined the class action suit against Enron. The fund, which holds the pensions of the city's firefighters, policemen and teachers bet huge on the stock. Together with the Florida employees' pension fund, the two lost more than $400 million on their Enron shares.