Thursday, March 03, 2005

News from the Henhouse 

The Way It Spozed to Be:
Audio tapes released Tuesday indicate at least 1,500 conversations in which traders employed by disgraced energy company Enron Corp. engaged in or discussed violations of federal regulations, a Federal Energy Regulatory Commission staffer said in testimony.

Those tapes, including some collected by a Washington state utility, may have "only scratched the surface" of potentially illegal activity by Enron during the West Coast energy crunch of 2000-2001, the FERC staffer testified . . . .

In the newly released testimony, part of an ongoing FERC civil investigation of utilities' complaints about Enron, FERC staff cited new evidence in which Enron's own lawyers recognized the incriminating nature of the audio tapes as early as October 2001, writing in a memorandum that, "We have already heard several conversations that should not be produced" in response to power market litigation.

Sen. Maria Cantwell, D-Wash., called FERC's decision to review the transcripts an about-face, saying agency staff initially tried to exclude the tapes from evidence.

"The fact this evidence almost fell through the cracks is not acceptable," Cantwell said. "Federal regulators shouldn't have to be embarrassed into doing their jobs. They're supposed to be the cops on the beat, standing between consumers and the mass public mugging that took place at the hands of Enron."
The Way It Is:
Securities regulators have given smaller U.S. corporations and foreign companies a one-year reprieve from a key part of the anti-fraud law enacted after the series of corporate scandals.

The Securities and Exchange Commission said Wednesday that it will give those companies, some of whom had complained about the burden of complying, an extra year, until July 15, 2006, to meet with the requirement to file reports on the strength of their internal financial controls under the Sarbanes-Oxley Act of 2002 . . . .

SEC Chairman William Donaldson said in an interview last month that the agency was looking at possible revisions to the anti-fraud law itself because it has proved too painful and costly for some companies to comply . . . .

Lynn Turner, a former chief accountant at the SEC, questioned the wisdom of the delay, saying Thursday that "investors should be concerned companies are still asking for more time to comply with" the requirements.

He also expressed concerns about how effective the certification would be, noting that there is still no guarantee there won't be financial misstatements.

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