May 25, 2006
A Puzzle from the Enron Verdict
Posted by Gordon Smith

In the early reports on the Enron verdict, one fact leaped out to me: Jeff Skilling was found guilty of fraud, but not of insider trading. What's up this that? (Larry Ribstein wonders, too.)

As it turns out, Skilling was convicted of one count of insider trading, which relates to a trade on September 17, 2001 (after his resignation as CEO of Enron). All of the other counts related to trades in 2000.

All of the counts against Lay related to actions taken after August 2001, when Skilling resigned.

But many of the fraud counts against Skilling relate to the filing of fraudulent financial statements in 2000, as well as statements to analysts in 2000.

So the question remains: how could he have been engaged in fraud during 2000, but not been engaged in insider trading?

More interesting thoughts on the verdict from Steve Bainbridge.

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