Skip to main content /LAW
CNN.com /LAW
CNN TV
EDITIONS
SERVICES
CNN TV
EDITIONS


find law dictionary
 

NYSE drops Enron; Andersen drops auditor



WASHINGTON (CNN) -- Enron's collapse has led the New York Stock Exchange to formally drop the once high-flying energy firm from its trading list and accounting giant Andersen to fire the lead auditor on its Enron account.

The New York Stock Exchange suspended trading of Enron stock on Tuesday and moved to formally de-list the firm, whose shares once were priced at $84 each but now trade for less than $1.

Officials at the stock exchange cited the company's bankruptcy, its uncertain future and the deep decline in the value of the stock. Enron can appeal the decision to de-list its stock.

"The exchange has determined that the company securities are no longer suitable for trading on the NYSE," Ray Pellecchia, a NYSE spokesman.

Also on Tuesday, accounting firm Andersen said it has fired the lead auditor who worked for Enron and placed three other partners on leave, based on a preliminary investigation into the destruction of documents related to the energy giant's collapse.

Andersen said it is putting new management in charge of its Houston office. (Full story)

The new developments came as the former chairman of a federal regulatory agency charged that the huge energy company had sought to manipulate energy policies to its own advantage. Also, revelations surfaced that a top employee had warned of trouble back in August, while the company's stock was still flying high.

Enron Collapse
 VIDEO/AUDIO
  •  Senate unit faults Enron board
  •  Corporate corruption in America
 MORE STORIES
  •  3 Britons charged in Enron fraud
  •  Bush pushes for tougher corporate rules
  •  Playboy exposes Enron workers
 EXTRA INFORMATION
  •  Document: Powers report
9.5MB (PDF)
  •  CNN/Money Special Report: Your 401(k)
  •  Timeline: Shredding through history
 RESOURCES
  •  In-Depth: The end of Enron?
  •  TIME.com: Inside the scandal

LEGAL RESOURCES

Latest Legal News

Law Library

FindLaw Consumer Center
 

The employee warned Chairman and CEO Kenneth Lay that she was worried that "...we will implode in a wave of accounting scandals," in a seven-page letter. (Full story)

Curtis Hebert Jr., a former commissioner with the Federal Energy Regulatory Commission in the Clinton administration , said in an interview with CNN: "Everything they espoused to Congress and to state leaders was always what's in the best interests of Enron, never what's in the best interests of American energy companies."

Hebert, who also served as FERC chairman in the Bush administration until he left the agency in August, said Lay had wanted the agency to "mandate regional transmission organizations."

"When I told him that I didn't think it was the right thing to do and also that there was no legal basis for it under the federal Power Act, he told me that he and his company, Enron, could no longer support me as chairman," Hebert said. (Full story)

The energy company, with $62.8 billion in assets, filed for Chapter 11 bankruptcy protection December 2, in the largest bankruptcy case in U.S. history.

Many Enron employees had invested most of their 401(k) savings in company stock and lost their life savings when it went bust.

William Lerach, an attorney for shareholders suing Enron, said executives sold about $1.1 billion in stock during a time when "they have now admitted they were overstating the reported profits of Enron by $600 million and the stockholder equity of the company by $1.1 billion," he said.

"These books were cooked by Lay and the other top executives, who put hundreds of millions of dollars in their pockets, while the employees of Enron were victimized and hundreds of thousands of other investors lost billions of dollars," Lerach said.

Meanwhile, a ruling on the sale of Enron Corp.'s wholesale business to UBS Warburg has been delayed until Friday, court documents revealed. Enron attorneys delayed the release of the final details three times Monday with the information now scheduled for unveiling Tuesday at 7 a.m. EST, according to a letter filed with the bankruptcy court by law firm Weil Gotshal and Manges.

Several investigations under way

Six Senate committees, two House committees and the Securities and Exchange Commission are probing various angles of the Enron debacle, and the Justice Department has launched a criminal investigation.

Attorney General John Ashcroft, a aide and the U.S. attorney's office in Houston, Texas, withdrew last week from any connection to the Justice Department investigation, citing possible conflicts of interest. Enron is based in Houston.

Andersen Co., Enron's auditing firm, is also under scrutiny following its revelations that some employees destroyed documents related to Enron's financial status.

Time magazine reported the company circulated a memo ordering the destruction just days before the company went bankrupt.

Sen. Joseph Lieberman, D-Connecticut, chairman of the Senate Governmental Affairs Committee, said the investigation may lead to indictments of Andersen employees.

In a statement released late Sunday, Andersen said it was "committed to getting the facts" and stated it asked former Senator John Danforth to review the firm's records management policy. Enron's financial troubles have also raised political questions because the Texas-based company has been a big supporter of President Bush's political career. The corporation and its executives have also given to Democratic candidates, but most of its campaign donations have gone to Republicans. Lieberman said it was too early to make any conclusions about possible political fallout. "...There is clearly a corporate scandal, " he said " Whether there is a government scandal it remains to be seen."

Two Bush Cabinet officials Sunday defended their contacts with Lay and Enron. Commerce Secretary Don Evans and Treasury Secretary Paul O'Neill received calls from Lay last fall as the once high-flying company was heading toward collapse. Both said they took no action as a result of the calls.



 
 
 
 



RELATED SITES:
LAW TOP STORIES:

 Search   

Back to the top