Enron's trading operations under spotlight at Senate hearing

The US Senate hearing on the collapse of Enron opened yesterday with expert testimony urging the focus of investigations to fall more on the firm’s derivatives trading operations.

In expert testimony, Frank Partnoy, a professor in the University of San Diego School of Law, warned that the probing into accounting practices should not take the spotlight away from the role that derivatives could have played in the energy monolith’s decline.

Partnoy - who is currently researching a book about Enron’s fall - claimed his research suggests that the profits Enron attributed to its derivatives operations may have been inflated due to systematic problems with the way the firm valued its positions and recorded them in its trading book. But Partnoy was unable to come up with any hard evidence at this time.

Enron spokesman Vance Meyer refused to address the matter, stating that the firm's representatives would not offer counterarguments to each testimony.

Meanwhile, senator Carl Levin, the Democrat chairman of the Senate governmental affairs committee hearing on the fall of Enron, used his opening address to take a sideswipe at US Treasury Secretary Paul O’Neill.

O'Neill had previously stated: “Companies come and go. Part of the genius of capitalism is people get to make good decisions or bad decisions and they get to pay the consequences or enjoy the fruits of their decisions.” But Levin expressed “surprise” at O’Neill’s comments, saying: “Ken Lay and his colleagues got the fruits and haven’t yet suffered the consequences."

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Most read articles loading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here